Why Mortgage Rates Are What They Are Right Now in Sioux Falls, SD

Author Amy Stockberger | Founder, Amy Stockberger Real Estate | Creator, Lifetime Home Support™ Academy | Ranked the #1 Real Estate Team in South Dakota since 2017 and #33 in the Nation by Real Trends

 

If you’re waiting for mortgage rates to fall significantly before buying or selling a home in Sioux Falls, SD, understanding what actually drives those rates can help you make a more informed decision.

Mortgage rates don’t move randomly, and they aren’t controlled by just one factor. One of the biggest influences is the relationship between mortgage rates and the 10-year Treasury yield. The difference between those two numbers is known as the mortgage spread, and right now, that spread is telling an important story.

For Sioux Falls buyers, sellers, and homeowners, understanding that relationship can put today’s rates into better perspective—and help you decide whether waiting really makes sense.

Why Mortgage Rates Matter in Sioux Falls, SD

Mortgage rates directly impact buying power.

Even a relatively small change in interest rates can affect:

That means buyers looking throughout Sioux Falls, SD, as well as nearby communities such as Brandon, Harrisburg, Tea, and Hartford, shouldn’t focus only on whether rates are “high” or “low.”

It’s more useful to understand why rates are where they are and what would actually need to happen for them to move significantly lower.

The Connection Between Mortgage Rates and the 10-Year Treasury Yield

Mortgage rates tend to follow the movement of the 10-year Treasury yield.

It isn’t a perfect one-to-one relationship because mortgage rates are influenced by several economic and financial factors. But historically, the two have generally moved in the same direction.

When investors feel confident about economic growth, Treasury yields can move higher. When economic uncertainty increases or expectations for growth weaken, yields may decline.

For more than 50 years, mortgage rates and the 10-year Treasury yield have maintained a strong relationship.

The difference between the two is known as the spread.

Historically, that spread has averaged roughly 1.76 percentage points.

A wider spread generally pushes mortgage rates higher relative to Treasury yields. A narrower spread allows mortgage rates to stay closer to Treasury yields.

Why Mortgage Rates May Not Drop Dramatically Soon

Many buyers are hoping mortgage rates will fall substantially before they make a move.

But one reason a dramatic decline may be difficult is that the mortgage spread has already improved considerably.

During the economic uncertainty of 2023, the spread between mortgage rates and the 10-year Treasury yield reached approximately 3.19 percentage points.

More recently, that spread has narrowed to roughly 2.01 points, moving much closer to its historical average of 1.76.

That improvement matters.

When the spread is unusually wide, there is more room for mortgage rates to improve simply because the spread can return toward normal levels.

When the spread is already relatively close to normal, there is less room for mortgage rates to fall from spread compression alone.

So buyers waiting specifically for the spread to create a major reduction in mortgage rates may find that much of that improvement has already occurred.

Why Mortgage Rates Aren’t Even Higher

There is another side to the story.

The narrowing mortgage spread is also one of the reasons rates aren’t substantially higher today.

Using the numbers from this market snapshot, the 10-year Treasury yield was approximately 4.68%.

If mortgage spreads were still as wide as they were during 2023, mortgage rates could be approaching 8%.

Instead, because the spread has narrowed, mortgage rates have been closer to approximately 6.69%.

If the spread returned exactly to its long-term average, rates would be roughly 6.5% based on the same Treasury yield.

That illustrates something important:

The narrowing spread has already provided meaningful relief.

It is helping keep mortgage rates significantly below where they could otherwise be, but it also means there may not be several percentage points of additional improvement waiting to come solely from a smaller spread.

What Sioux Falls Homebuyers Should Focus on Instead

Trying to perfectly time mortgage rates can be difficult.

Rather than making your entire buying decision based on predictions about future rates, focus on the numbers you can evaluate today.

1. Know Your Comfortable Monthly Payment

Start with the monthly payment that fits your budget rather than focusing only on the home’s purchase price.

Ask a trusted lender to calculate different scenarios based on:

That gives you a much clearer understanding of what buying a home in Sioux Falls, SD would actually cost each month.

2. Compare the Cost of Waiting

Waiting for rates to fall isn’t automatically the cheaper option.

While you wait, home prices, inventory, rent, your income, and available properties can all change.

If the right home becomes available and the payment fits comfortably within your financial plan, waiting solely for a dramatically lower mortgage rate could mean missing an opportunity.

3. Remember That Refinancing May Be an Option Later

Buying a home and choosing a mortgage are connected decisions, but they aren’t necessarily permanent decisions.

If rates decline meaningfully in the future, some homeowners may have the opportunity to refinance, depending on their individual financial situation and market conditions.

You can potentially change the financing later.

You can’t always go back and purchase the exact home that fit your needs today.

What This Means for Sioux Falls, SD Sellers

Mortgage rates matter to sellers too.

Higher borrowing costs can influence buyer purchasing power, which makes accurate pricing and strong marketing even more important.

A seller in Sioux Falls shouldn’t automatically assume buyers have disappeared because rates aren’t at historic lows.

Instead, the strategy needs to account for:

Homes that are positioned correctly can still attract motivated buyers even in a higher-rate environment.

How Amy Stockberger Real Estate Can Help

Buying or selling a home isn’t just about watching mortgage rates.

At Amy Stockberger Real Estate, our clients receive support before, during, and long after the transaction through Lifetime Home Support™.

Our approach gives clients access to resources designed to make homeownership easier, including our network of trusted Home Support Team Partners.

Depending on your needs, that can mean connections to professionals for financing, insurance, inspections, moving, repairs, maintenance, improvements, and other homeownership services.

The goal isn’t simply to help you close on a property.

It’s to help you make confident decisions throughout your entire homeownership journey.

Ready to Take the Next Step?

You don’t need to predict the perfect mortgage rate to make a smart real estate decision.

You need to understand your numbers, your options, and how the current Sioux Falls, SD real estate market fits your goals.

If you’re considering buying, selling, or making a move and want to understand what today’s rates could mean for your monthly payment and purchasing power, connect with Amy Stockberger Real Estate.

Our team is here to serve — before, during, and forever.

Have More Questions About Real Estate in Sioux Falls, SD?

Ask our 24/7 Sioux Falls, SD Real Estate Help Center AI Assistant or contact Amy Stockberger Real Estate for a personalized selling strategy.