FHA mortgage rate trends 2024
Mortgage rates are the interest rates charged on home loans. When mortgage rates are lower, borrowers pay less money in interest over the course of their home loan. These rates can be significantly affected by underlying economic conditions. Between 2021 and 2023, post-pandemic inflation and rising federal interest rates contributed to average annual mortgage rates more than doubling.
In 2023, FHA loans represented 15.6% of all new single-family mortgages, down from a post-housing crisis high in 2009 of 32.6%.
Jump to insightIn April 2024, the index rate on an FHA 30-year fixed mortgage was 6.797%. The rate was 2.804% in December 2020.
Jump to insightThe average rate on a conventional 30-year fixed mortgage reached a low of 2.65% in early January 2021, the lowest such rate on record (dating back to 1971).
Jump to insightThe Congressional Budget Office forecasts that mortgage rates will remain relatively high for the remainder of 2024 but will likely decline in 2025 and 2026.
Jump to insightFHA mortgage rate trends
A Federal Housing Administration (FHA) loan is a mortgage loan insured by the federal government. FHA loans are just one common type of mortgage loan, along with conventional loans, VA loans and USDA loans.
According to the U.S. Department of Housing and Urban Development (HUD), the FHA has insured more than 40 million homes since it was established in 1934. The FHA loan program makes it easier for borrowers with less-than-perfect credit to obtain mortgages. Since 2001, FHA loans have represented between 4.5% and 32.6% of all single-family home loans.
In the wake of the 2008 housing crisis, the percentage of new homebuyers using FHA loans to finance home purchases increased dramatically.
FHA mortgage rates over time
As of April 2024, the rate on a 30-year fixed rate FHA loan was 6.797%. Rates have generally been increasing since they reached record lows at the beginning of 2021, with a recent peak of 7.369% in October of 2023. Since then, rates have slightly tapered off.
Freddie Mac, a government-sponsored private company that insures conventional mortgages, publishes weekly data on mortgage rates. Their published rates for 30-year fixed mortgages generally track closely with FHA mortgage rates. According to Freddie Mac’s data, the 2.65% average mortgage rate in early January of 2021 is the lowest rate on record (with data stretching back to 1971).
What affects mortgage rates?
The FHA mortgage index reflects the average rate for borrowers across the nation. However, the rate of an individual mortgage can be higher or lower than that average, depending on a number of factors.
What is a streamline refinance for FHA mortgage?
A streamline refinance refers to the process of refinancing an existing FHA mortgage. Borrowers may want to refinance their existing mortgage for several reasons. These include the ability to lower their interest rate or change their interest rate type, for example, from an adjustable rate to a fixed rate.
The name of the streamline refinance program reflects its ease of use and its availability to borrowers. The process is typically simpler and requires less documentation than a traditional refinance or loan qualification process.
A mortgage loan must meet several criteria to qualify for a streamline refinance:
- The mortgage must already be FHA-insured.
- The borrower cannot be delinquent on loan repayments.
- The refinance must have a net benefit to the borrower.
- The refinance can not include more than $500 in cash-out funds.
FHA mortgage rate predictions for 2024
The rise in mortgage rates over the past several years is tied to inflation in the overall economy. As the Federal Reserve has raised the Federal Funds Rate to combat inflation from an historic low of 0.05% in May 2020 to 5.33% in April 2024, average mortgage rates have increased as well.
According to the Congressional Budget Office (CBO), the economic factors that have led to increasing mortgage rates are likely to continue in 2024. Therefore, the CBO expects that mortgage rates will remain relatively high throughout 2024 (particularly in comparison to the low rates seen in 2020 and 2021). However, they also predict that inflation will likely continue to fall, and mortgage rates will likely decline in 2025 and 2026.
FAQ
What is the lowest 30-year mortgage rate ever recorded?
According to data from Freddie Mac, the 30-year mortgage rate in January 2021 was 2.65%, the lowest ever recorded.
What is the highest mortgage rate ever recorded?
According to data from Freddie Mac, the 30-year mortgage rate hit a record high of 18.63% in October 1981.
What will mortgage rates be in 2024?
The CBO projects that mortgage rates will remain relatively high in 2024, before falling in 2025 and 2026. Likewise, Freddie Mac forecasts that mortgage rates will remain “elevated” for the remainder of 2024.
References
- “30-Year Fixed Rate FHA Mortgage Index.” Federal Reserve Bank of St. Louis. Evaluated May 19, 2024.Link Here
- Shea, N. “Seven factors that determine your mortgage interest rate.” Consumer Financial Protection Bureau. Evaluated May 20, 2024.Link Here
- “Streamline Your FHA Mortgage.” U.S. Department of Housing and Urban Development. Evaluated May 19, 2024.Link Here
- “Affordable Mortgage Lending Guide - Streamline Refinance.” Federal Deposit Insurance Corporation. Evaluated May 20, 2024.Link Here
- “Federal Funds Effective Rate.” Federal Reserve Bank of St. Louis. Evaluated May 19, 2024.Link Here
- “The Budget and Economic Outlook: 2024 to 2034.” Congressional Budget Office. Evaluated May 19, 2024.Link Here
- “FHA Single Family Market Share - Table 3.” U.S. Department of Housing and Urban Development, Federal Housing Administration. Evaluated May 20, 2024.Link Here
- “FHA-Insured Single-Family Mortgage Market Share Report.” U.S. Department of Housing and Urban Development. Evaluated May 20, 2024.Link Here
- “Primary Mortgage Market Survey.” Freddie Mac. Evaluated May 20, 2024.Link Here
- “U.S. Economic, Housing and Mortgage Outlook - May 2024.” Freddie Mac. Evaluated May 20, 2024.Link Here
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