2024 Texas Mortgage Rates Forecast

Lower Mortgage Rates Expected in Texas Amidst Promising Signals from the Fed.

There appears to be an end in sight to rising mortgage rates, at least for the time being. Despite signs of receding inflation pressures and encouraging signals from the Federal Reserve, mortgage rates have dropped markedly in recent weeks after reaching a scorching 7.79% in October.

Freddie Mac reported a four basis point rise in the average 30-year fixed mortgage rate for the week ending January 11, 2024. One basis point equals one hundredth of a percentage point.

Though the downward trend in rates bodes well for a still-stagnant housing market, experts warn that 2024 will still present challenges for buyers and sellers due to still-high rates.

For the third straight time, the Federal Reserve holds rates steady: What Does This Mean for Mortgage Rates in 2024

Mortgage rates are indirectly influenced by the federal funds rate, which is the overnight borrowing rate for Texas mortgage lenders, commercial banks and credit unions.

A rate-hike pause has taken place at the third successive FOMC meeting, keeping the benchmark interest rate range at 5.25% to 5.5%. But the good news is most experts forecast 3 rate cuts in 2024.

Although Jerome Powell reiterated at the Fed’s post-meeting press conference that inflation remains far above the Fed’s long-term, sustainable 2% target rate, policymakers released updated economic projections with a lower rate range in 2024 that includes three cuts by the end of the year, indicating that this cycle of rate hikes has come to an end.

Texas Mortgage Rates 2024

Considering all of this, how will mortgage rates change in 2024? To start the new year, FHA mortgage rates were at 7.25%, VA mortgage rates 7.75% and USDA rates currently at 7.25%.

“Mortgage rates will continue to ease in 2024 as inflation improves and Fed rate cuts get closer,” said Realtor.com CEO and economist Danielle Hale. Homebuyers could benefit from affordability relief as mortgage rates approach 6.5% by the end of 2024.

Due to the Fed’s aggressive interest rate policy actions to tame inflation, mortgage rates have skyrocketed to their highest levels in decades.

The Feds Have Paused Rate Hikes in 2024

In the past year, refinance activity has been sluggish but is showing signs of life now that mortgage rates have declined, according to new data from the Mortgage Bankers Association.

In 2024, once the Fed lowers interest rates, experts predict refinancing volume will rise even more, as borrowers who took on high interest rates will be eager to lower them.

In an emailed statement from Michele Raneri, vice president of TransUnion’s U.S. research and consulting, said refinancing at a 5.5% interest rate could result in substantial savings for these homeowners, since refinancing at that rate could result in an average monthly payment of $1,917, a monthly savings of $284.

So while not out of the woods, 2024 appears to be the year where the economy and housing market will slowly start turning the corner. This means good news for Texas home buyers this year. Check out current January, 2024 mortgage rates at Lone Star Financing.

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