Texas’ Mortgage Market Stabilizing

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The Texas mortgage market is showing signs of stabilizing, according to the Texas Residential Mortgage Survey as reported by the Texas Real Estate Research Center.

After the Federal Reserve increased interest rates last year, industry conditions “worsened.” However, in January 2023, Texas experienced “an uptick in residential mortgage activity relative to December, and operations are expected to accelerate in the first two quarters of 2023.”

The Survey showed the “index for average value of home-purchase originations lifted into positive territory, indicating expectations of higher home prices after seven straight months of correction.”
Texas Real Estate Research Center Research Economist Adam Perdue said, “This may be a first sign that falling prices have started pulling potential buyers back to the housing market. Housing affordability, however, remains hindered by higher interest rates and prices relative to those seen during the COVID-19 pandemic.”

Mortgage loan originations are expected to rebound over the next six months, as pre-approved customers expressed increased confidence in upcoming home searches. “We are optimistic for the start of the 2023 home-buying season,” said Steve Remington, president of the Texas Mortgage Bankers Association. “The feedback from many of our members echoes the data shown in the survey, with a recent uptick in borrower applications and pre-qualifications after a sharp decrease in the second half of last year.”

Remington said he expects the Texas home market to perform well going forward this year as interest rates moderate and home values stabilize.