Rate Cuts Are Dead. Now Bank of America Is Calling for Hikes. Here's What Texas Land Buyers Need to Know.

Published: July 21, 2026 | By Dan Cunyus, RMLO NMLS #218025 | First Source Capital Mortgage, Inc. NMLS #217672

Bank of America dropped a headline last week that got a lot of attention in mortgage circles: the firm now forecasts three quarter-point Federal Reserve rate hikes before the end of 2026. Not cuts — hikes. If BofA is right, the Fed funds rate climbs from 3.5-3.75% to 4.25-4.5% by December.

The respected housing analyst Logan Mohtashami at HousingWire pushed back immediately, arguing that market signals — a 10-year Treasury yield sitting around 4.51% and oil below $74 — don't support three hikes in that timeframe. His call: 0 to 1 hike is more realistic.

Here's the part that should catch your attention regardless of who's right: not one expert in this conversation is talking about rate cuts. The debate has moved from "when does the Fed cut?" to "how many times does the Fed hike?"

If you've been waiting for mortgage rates to drop before buying rural land in Texas, this changes the picture considerably.

What the Experts Actually Agree On

The Bank of America forecast is aggressive, and there's a reasonable case it doesn't happen. The Iran conflict has eased, oil prices have come down from their peak, and the Fed typically moves cautiously when geopolitical risk is unwinding.

But the areas of agreement are significant for buyers:

The rate cuts the market had priced in at the beginning of 2026 are gone. All of them. Every major forecaster has pulled rate cuts off the table. The only debate now is between "rates stay flat" and "rates go higher."

The 30-year conforming mortgage is currently running at 6.79%, per HousingWire. In the best case — no hikes, some economic softening — you might see modest improvement. In the BofA scenario, rates push toward 7.5% or higher. There is no near-term path that gets you back to 6%.

For a buyer waiting for rates to meaningfully improve before making a land purchase, this is important context. The window you're waiting for may not open. And as we covered in our last post, the land you're watching appreciates at around 6% annually in Texas whether the debate gets resolved or not.

The Problem With Making a Land Decision Based on Macro Uncertainty

Here's what I see with buyers who get stuck on rates: they're trying to time a macro variable they can't control while ignoring the variables they can.

The Fed's decision depends on labor data, inflation, oil prices, whether Kevin Warsh and the FOMC governors are leaning hawkish or dovish this month, and geopolitical events nobody predicted six months ago. Bank of America and one of the most respected housing analysts in the country can't agree on the outcome. Neither can the markets.

What you can control: which lender you use, which program you're in, and whether you have your financing figured out before the seller gets another offer.

Why the Rural Land Market Isn't Fully Exposed to This Debate

There's a detail that gets lost in these conversations: most rural land buyers in Texas aren't in the conforming mortgage market to begin with. The programs that actually finance rural acreage operate on their own terms — and why most conventional lenders won't touch rural land is something we've covered in detail.

Texas Veterans Land Board (VLB): Program rate set independently. The volatility in the 10-year Treasury that drives BofA's rate hike prediction doesn't directly determine your VLB rate. Eligible Texas veterans, active duty, and National Guard members get access to a 30-year fixed product with its own program pricing.

USDA Farm Service Agency (FSA): Designed specifically as an alternative to commercial lending. Up to $600,000, not credit-score based, structured to provide access when market rates would otherwise lock out beginning farmers and ranchers. If commercial rates go to 7.5% because BofA is right, FSA still exists.

Farm Credit Cooperatives: Set their own rates based on their cost of funds, not Freddie Mac's weekly survey. They also return annual patronage dividends — maybe up to 1% of interest paid — back to borrowers, which reduces your effective cost regardless of what the Fed does.

The macro rate debate matters to a suburban homebuyer trying to refinance or a first-time buyer stretching for a conforming loan. For rural land, the relevant question is whether you qualify for the programs that operate outside that market — and whether you've talked to a lender who knows how to get you into them.

What This Means Practically

If you're sitting on the sideline waiting for rate clarity, here's what you're really doing: you're waiting for a macro debate that experts at Bank of America and HousingWire can't resolve, while the land you want continues to appreciate.

In the meantime:

The programs that finance rural Texas land are available right now with terms that don't depend on the Fed cutting rates. A VLB loan doesn't get better in a rate-cut environment in the same way a conforming loan does. A Farm Credit rate that comes with patronage dividends is already reducing your effective cost to some degree — today.

And if BofA is even partially right and rates drift higher before the end of the year, the buyer who acted in June is sitting in a considerably better position than the buyer who waited until December to find out.

In my own experience over the past 30 years or more, waiting on rates to fall is a fool's game, and one that I have rarely seen work for the benefit of a borrower who wants and needs to purchase land now. Waiting on rates to fall is akin to waiting for rain to plant a crop. By the time rain does come, the time for planting has past, or other circumstances have created a greater demand for that perfect piece of land, and the asking price has now shot way up and the numbers no longer make sense regardless of how low rates might fall.

The Bottom Line

Bank of America calling for three rate hikes doesn't mean three rate hikes are coming. But nobody is calling for rate cuts. The range of outcomes runs from flat to higher, and the timeline for any improvement remains genuinely uncertain.

For Texas rural land buyers, the right question isn't "what will the Fed do?" It's "what programs do I qualify for, what does my deal actually look like with current financing, and what is the property going to cost me if I wait twelve months while the economists argue?"

We can answer the first two on the first phone call. The third one is math that most buyers aren't running.

If you're serious about rural land in Texas, New Mexico, or Oklahoma, call us before the market answers that question for you.

First Source Capital Mortgage, Inc. | Company NMLS #217672 | (888) 484-1256 | www.fscap.com

Rate analysis sourced from HousingWire: "Will the Fed really hike rates 3 times in 2026, per Bank of America?" by Logan Mohtashami, June 22, 2026. Current 30-year rate (6.79%) as reported by HousingWire/Altos Research, June 23, 2026. Texas Veterans Land Board program details from glo.texas.gov. USDA Farm Service Agency details from fsa.usda.gov.