What drives MYGA rates - and how to decide whether to lock in

Multi-year guaranteed annuity (MYGA) rates are not set in a vacuum. They move with the broader bond market, and understanding that mechanism is far more useful than chasing any single headline number. This explainer covers what actually drives MYGA pricing, how example rates stack up against the alternatives, and a simple framework for deciding whether locking in makes sense for you.

Where MYGA rates stand

As of October 13, 2026 (verified against published product pages that day), the highest effective annual yields by term among A.M. Best A- and better carriers look like this:

• 2-year MYGA: 4.80% (Aspida Synergy Choice, A-)
• 3-year MYGA: 5.70% (Aspida Synergy Choice, A-)
• 5-year MYGA: 6.30% (Aspida Synergy Choice, A-)
• 7-year MYGA: 6.35% (Aspida Synergy Choice, A-)
• 10-year MYGA: 6.00% (Lincoln Financial MyGuarantee Plus, A)

One important caveat: the highest headline rates in the market are often first-year bonus rates from lower-rated carriers (for example, Atlantic Coast Life's Safe Harbor Bonus Guarantee: 7.45% in year one, then 6.45%), credited as simple interest rather than compound - the effective annual yield over the full term is materially lower (about 5.91% on the 5-year schedule last readable September 4, 2026; the 7- and 10-year schedules were not published at that check) - and the carrier was cut by A.M. Best to C+ (Marginal) on September 22, 2026, a rating still under review. South Carolina's insurance director asked a court on September 15, 2026 to place the carrier in rehabilitation, and Florida suspended its certificate of authority on September 30, 2026 (Insurance Journal report). Headline rates like these are not directly comparable to a bank CD's compounding APY.

Those are the top effective yields from A- or better carriers, not the highest advertised headline rates. The all-carrier average is meaningfully lower - an illustrative 5.59% on a 5-year contract - which is exactly why surveying multiple A-rated carriers matters. Because these figures change as carriers re-price, confirm the latest rate with a licensed specialist before you act; our MYGA rate comparison shows dated representative figures.

What drives MYGA rates

Insurers back MYGA contracts largely with investment-grade bonds - intermediate Treasuries and high-quality corporates. The yield a carrier can guarantee is therefore tied to what those bonds yield when it invests your premium. A few forces shape that:

Treasury yields

The intermediate part of the Treasury curve - especially the 5-year (around 5.02%) and 10-year (around 5.24%), per Treasury par yields at the October 9, 2026 close - is the single biggest reference point. When those yields rise, carriers can buy higher-yielding bonds and pass more of that yield through as guaranteed MYGA rates; when they fall, new-money MYGA rates tend to follow, usually after a short lag. That lag is why carriers re-price unevenly and why the spread between the best and an average carrier on the same term is often wider than any short-term market move.

Fed policy

The Federal Reserve sets the overnight federal funds rate, which most directly anchors the short end of the curve. Its influence transmits to the intermediate yields that drive MYGA pricing more indirectly - through the market's expectations for the path of future short-term rates and inflation. A higher-for-longer policy stance generally supports higher MYGA rates; an easing cycle tends to pull them down over time.

Carrier competition and credit spreads

Carriers also compete for premium. Newer or growth-focused carriers frequently price aggressively to win market share, which is a large part of why the top rate can sit well above the average. The extra yield carriers earn on corporate bonds over Treasuries (the credit spread) also gives them room to lift guaranteed rates. But a wider spread is pay for taking more credit risk, which is one reason to weigh a carrier's financial strength alongside its rate.

How a MYGA compares to a CD

The headline comparison is straightforward: even measured on effective annual yield (6.30% for the leading A- carrier's 5-year product, Aspida Synergy Choice at the $100,000+ band, checked October 13, 2026), a leading 5-year MYGA is far above the 5-year CD national average of about 1.41% (FDIC, October 19, 2026). But that average includes big banks paying close to nothing, and many banks beat it, so compare against a CD you could actually open. Against a competitive 5-year CD at, say, 4.40% APY (an assumed rate for illustration, not a quote), the leading MYGA is about 1.9 points ahead, and even the average 5-year MYGA, an illustrative 5.59%, is about 1.2 points ahead. The leading MYGA is also about 1.3 points above the 5-year Treasury near 5.02% (October 9, 2026 close), but that comparison isn't like-for-like. Treasuries are backed by the U.S. government, their interest is exempt from state and local income tax, and they can be sold before maturity at market prices. A MYGA's guarantee rests on the insurer's claims-paying ability, and early withdrawals above the free amount can trigger surrender charges and, on many contracts, a market value adjustment. (High-yield savings around 4.25% and 1-year CDs averaging about 1.76% (FDIC national average, October 19, 2026) are short-term, liquid options - useful for cash you may need, but not a true substitute for a multi-year rate lock.)

Tax deferral helps, but it does not widen the gap. For money outside an IRA, CD interest is taxed every year, while MYGA growth is taxed only when you withdraw it. Taxes still shrink both yields, so the after-tax gap in percentage points is usually smaller than the headline gap. For example, at a 32% tax rate over five years, a 6.30% MYGA works out to about 4.45% a year after tax, and a 4.40% CD to about 2.99%. That's a gap of about 1.5 points, versus 1.9 before tax. Deferral helps most if you can withdraw in a year when you're in a lower tax bracket. To see the after-tax difference for your premium, term, and bracket, run the numbers through our MYGA vs. CD calculator.

Should you lock in now?

Trying to time the absolute peak in rates is a losing game - even professionals can't forecast the bond market reliably. A more durable framework:

1. Match the term to your time horizon. A MYGA's rate is guaranteed for the full term the day you fund, and early withdrawals beyond the contract's free-withdrawal allowance trigger surrender charges. Only commit money you genuinely won't need during the term.
2. Shop several A-rated carriers. Because the spread between the best and average rate on the same term is often large, surveying multiple financially strong carriers usually matters more than waiting for a marginally better market.
3. Value the lock itself. Once you fund a competitive rate from a strong carrier, you're insulated from future declines for the whole term - that certainty has real worth, particularly if you'd otherwise sit in cash.
4. Don't reflexively exchange an existing contract. If you already hold an older MYGA at an attractive rate, surrendering it rarely pays unless a substantially better current offer more than offsets the surrender charge.

If you're otherwise ready to commit, the decision usually comes down to fit - term, carrier strength, and your need for liquidity - rather than forecasting the next move in rates. See dated example rates on our MYGA rates page and check the after-tax math before you decide.