What’s the Outlook for VA Mortgage Rates in 2024?

Mortgage rates have risen significantly over the past couple of years, going from an average of 3.05% in mid-October of 2022 to a high of 7.57% last week. This trend has caught a lot of home buyers off guard. Even some economists and mortgage industry analysts have been surprised by how much rates have risen over the past 24 months.  

Today, we will explain how this affects borrowers who plan to use a VA home loan in 2024. We’ll provide an update on where we are right now, along with a VA mortgage rate outlook and forecasts stretching into 2024.  

The truth is no one can predict future interest rate trends with complete accuracy. So, you can’t say for sure what VA mortgage rates will do in 2024. But you might be happy to hear that several analysts have predicted a gradual decline in the near future.  

Where We Are Now  

In late October 2023, the average rate for a 30-year fixed mortgage loan climbed to 7.57%. This information is based on the weekly mortgage industry survey conducted by Freddie Mac, the government-sponsored enterprise that purchases home loans from lenders.  

Note: Freddie Mac’s survey does not distinguish between different loan types. They do not have a separate survey for conventional, FHA, and VA loans. Instead, their surveys and forecasts include all types of mortgage loans. But it’s still one of the best indicators available to us.  

As mentioned in the introduction, the average rate for a 30-year fixed mortgage loan (VA or otherwise) has more than doubled over the past couple of years. Here’s a quick recap of how we got to this point:  

During much of 2020 and through all of 2021, 30-year mortgage rates were averaging in the high 2% or low 3% range.  

Starting in 2022, however, mortgage rates began to rise steadily, ending the year at around 6.4%.  

In 2023, home loan interest rates have fluctuated a bit but have risen for the past several months in a row.  

And that brings us up to the present. But what about the future? In essence, VA mortgage rates today might differ completely from previous estimates. 

This begs the question: what is the forecast for VA loan mortgage rates in 2024? Here are some recent predictions that offer some insight on the subject.  

Forecasts for VA Mortgage Rates in 2024  

Economists from Freddie Mac recently stated that they “expect mortgage rates to remain above 6% for the rest of [2023], which will keep sales volume low.”  

And that forecast is a fairly safe bet. After all, VA mortgage rates are currently hovering in the 7.5% range on average, and we only have a couple of months left in the calendar year. So, it might be even more realistic to say that they will remain above 7% for the rest of this year.  

In October 2023, the Mortgage Bankers Association (MBA) predicted that rates would finish the year at around 7.2% and then fall steadily during 2024. According to their forecast, VA mortgage rates could average in the upper 6% range at the start of next year and fall to the low 6% range by the end of 2024.  

The California Association of Realtors also expects mortgage rates to decline in 2024. In September, they issued a forecast for the California housing market that also included their outlook for mortgage rates.  

According to C.A.R. president Jennifer Branchini: “2024 will be a better year for the California housing market for both buyers and sellers as mortgage interest rates are expected to decline next year. A more favorable market environment with lower borrowing costs, coupled with an increase in available homes for sale, will motivate buyers and sellers to reenter the market next year.”  

If these predictions turn out to be accurate, borrowers could enjoy lower VA mortgage rates in 2024 compared to where we are right now.  

But we have to remember these mortgage rate forecast 2024 are the equivalent of an educated guess. No one can predict future economic or interest rate trends with complete accuracy. Still, it’s nice to know that the experts believe lower borrowing costs are on the horizon.  

How Do Mortgage Rates Change? 

All these fluctuations and uncertainty of current VA mortgage rates beg the question of how these rates are affected. To understand this, you need to analyze that the VA loan rates can fluctuate virtually daily, and on turbulent trading days, an interest rate may differ in the afternoon from the rate established in the morning. 

As investors contemplate interest rate changes, they consider how the economy is currently functioning. For example, if the economy appears to be improving, investors can withdraw assets from the GNMA 30-year bond and invest in equities in expectation of a strong economy. 

On the other hand, if it looks like the economy is flat or faltering, with no prospects of revival in the foreseeable future, investors can maintain their money in bonds or invest even more in the GNMA 30-year bond. 

For example, if an Unemployment Report revealed that more people were unemployed or that industrial orders were down, both suggest a weak economy that will drive down rates. Conversely, positive economic data implies that low interest rates are in the rearview mirror, and the stock market is poised for a recovery. 

This poses the question of whether you should use economic data to decide whether to buy a home or refinance an existing loan. Perhaps, but it isn’t required for the majority. However, understanding why interest rates fluctuate is useful. 

Since the VA mortgage rates in 2024 are inextricably tied to wider economic trends and data, the VA mortgage rates recent changes can be triggered by certain factors, such as:  

1. The Economic Landscape   

Mortgage rates may be influenced by a number of significant economic factors:   

• Monetary Policy: The Federal Reserve’s financial policy opinions, similar to interest rate adaptations and asset purchases, have a significant influence on interest rates. The Federal Reserve’s financial station, as it seeks to balance inflationary pressures and profitable development, can impact the direction and quantum of VA mortgage rates.  
• Inflationary Pressures: Supply chain dislocations and financial encouragement enterprises have aggravated affectation fears in recent times. Increased inflationary pressures may drive the Fed to strain financial policy, maybe raising VA mortgage rates.  
• Employment Trends: Labor request conditions, similar to severance and pay envelope growth, can give sapience into the frugality’s general health. Strong job growth and rising stipends may enhance consumer confidence and cause demand, impacting mortgage interest rate patterns. 

2. Policy Considerations  

Policy opinions at the civil position can also shape VA mortgage rate trends in 2024  

• Federal Reserve Conduct: The Fed’s opinions regarding interest rates and financial policy measures are nearly covered by request actors. Any shifts in the Fed’s station, whether towards tensing or easing, can impact mortgage rates and borrowing costs for VA loans.  
• Government Spending and Financial: Policy financial policy measures, similar to government spending enterprise and duty programs, can impact profitable exertion and interest rates. Proposals for structure investment and social programs may impact investor sentiment and mortgage rate prospects.  

• Regulatory Changes: Regulatory developments within the casing finance sector, including reforms to government-patronized enterprises (GSEs) like Fannie Mae and Freddie Mac, can affect mortgage lending norms and vacuity. Policy changes aimed at addressing casing affordability and access to credit may impact VA mortgage rates. 

Getting the Lowest Rate Possible  

Throughout this article, we have cited average VA mortgage rates based on Freddie Mac’s weekly survey of the lending industry. These averages help us track borrowing costs and trends over time. However, the interest rate you receive on a mortgage is going to depend on several different factors, including VA loan credit requirements and the type of loan you choose.  

In a separate article, we explained how to get the lowest possible mortgage rate when using a VA home loan. Here are some of the highlights from that article:  

1. Try to improve your credit score 

Credit scores are an indicator of risk. Lenders view borrowers possessing higher credit scores as being a lower risk and offer them better mortgage rates as a result. The best way to increase your credit score and match the required VA loan credit score requirements is by clearing all of your bills on time and in full.  

2. Consider using mortgage discount points  

This strategy requires you to pay more money upfront, but it also reduces your mortgage rate and the total amount of interest you pay over time. If you stay in the home long enough, discount points could work to your advantage.  

3. Consider using an adjustable-rate mortgage loan 

ARM loans tend to have lower initial interest rates when compared to the more popular 30-year fixed-rate mortgage option with attractive mortgage rates 2024 refinance options. Because of this, adjustable mortgages can help borrowers save money during the first few years of home ownership. Just know that your interest rate can change annually once you get past the introductory phase of the first few years.  

So there you have it: an update on VA mortgage rates with a forecast for 2024.