What Falling Bond Yields Could Mean for 2026 Annuity Rates 

Why Yields Are Starting to Slide 

After peaking above 5% in 2023–24, long-term Treasury and investment-grade corporate yields have eased through much of 2025. The 10-year Treasury recently hovered near 4.1%. Inflation has cooled, rate-cut expectations are building, and bond prices have recovered. For insurers, that means new money yields—the lifeblood of annuity pricing—are coming down. 

Fixed and multi-year guaranteed annuities (MYGAs) saw average crediting rates near 6% just a year ago. Now, with 10-year Treasuries closer to 4%, the high-rate era may be tapering. Many in the industry view this as a natural adjustment following two unusually strong years for fixed rates. 

 How Insurer Portfolios Adjust 

Insurance general accounts don’t reprice instantly when yields move. Even as new acquisitions earn less, much of the portfolio still benefits from older, higher-yielding assets. This lag gives carriers flexibility: they can keep rates relatively elevated for a time even as underlying yields fall. 

Some observers note that recent annuity rate sheets may reflect the upper range of what insurers can sustain if yields continue trending lower. That doesn’t mean rates will necessarily fall soon—but it highlights how market movements eventually filter into product pricing. 

What Advisors Should Watch Heading Into 2026 

Here are a few dynamics worth keeping on the radar: 

• Current fixed-rate levels may appeal to clients who are comfortable trading some liquidity for predictable returns. 

• Laddering maturities remain a practical way to manage reinvestment risk if future rates adjust downward. 

• Product type matters. Fixed, indexed, and registered index-linked annuities each respond differently depending on how carriers allocate hedging budgets. 

• Monitor yield spreads. The difference between what insurers earn on new investments and what they credit to clients remains the key driver of rate changes. 

Closing Thought 

Interest rates may decline faster than insurer portfolios can adjust, but annuity crediting rates eventually tend to follow broader bond-market trends. For advisors, 2025 may represent an important inflection point—a time to revisit client conversations about how guarantees fit within a changing yield environment. 

Takeaways 

• Bond yields have eased in 2025, signaling possible downward pressure on future annuity crediting rates. 

• Insurer portfolios adjust gradually, so today’s rates may remain competitive for a period even if yields keep drifting lower. 

• Advisors who frame this as a market shift—not a forecast—can help clients make informed, comfort-based decisions.