Mortgage rates in Texas: What Does the Future Behold?

mortgage rates in Texas

The easygoing lifestyle, favorable weather conditions, and flourishing high-pay job opportunities continues to draw numerous Americans to settle in Texas.

However, the recent unbelievable hikes in mortgage rates in the entire US – let alone Texas –  have made it difficult for first-time homebuyers to finance a decent home. 

But are the current situations going to soften in the future?

Let’s now take a deeper dive and identify the future of mortgage rates in Texas.

Historical Trends of Mortgage Rates in Texas 

Texas mortgage rates have fluctuated over the past several decades, exhibiting an overall downward trend. For example, mortgage rates Texas hovered around 8% in the 1990s, but since then, they have significantly decreased, going as low as 3% in 2020. 

However, the scenario was different in 2022, when the rates soared to unprecedented high levels, up to a maximum of 7.08% in November of last year. 

Fortunately, the rates have started to decline in 2023, but they are still comparatively higher for new homebuyers in the market.

Mortgage Rates in Texas 2023

In Texas, you can usually get a mortgage on a fixed or a fluctuating (APR) rate with varying loan terms; 30-years being the most common. As of today, the average national APR for a 30-year fixed mortgage is 6.81%, while it’s 6.92% for a 30-year fixed refinance loan. 

It should be noted that the Texas housing market usually mirrors the national mortgage rates.

Future Predictions of Mortgage Rates in Texas

According to top experts from Fannie Mae, Freddie Mac, and Mortgage Bankers Associations, the rates in Texas are expected to decline in 2023 and float at 6%. Economists also believe that the inflation has reached its maximum in the US, and the Feds might slow the pace of the rate hikes.

In addition to this, the home’s prices are also reducing in Texas, but they are still well above the 2020 averages. While these factors suggest that the overall home’s affordability may rise in the US, it might not be true. Why is that? 

Well, the buyer market is faced with another issue: low inventory of houses. Therefore, the rates might reduce in the future, but the low housing supply might cause fierce competition in the buyer’s market.  

Factors affecting current Texas Mortgage Rates

Here are some factors affecting Texas mortgage rates.

1. Federal Reserve policy

FEDs policies and the key economic indicators such as inflation, gross domestic product (GDP), and employment rates can significantly influence mortgage rates. In recent times, FEDs have been increasing the rates to curb inflation. 

While it seems that the US economy is recovering, FEDs may prefer lowering the rates in future.

2. Local economic conditions 

The strength and growth of the local economy can affect mortgage rates. Even though the Texas economy is experiencing growth, if things were to take a different turn, it’s possible for the mortgage rates to witness a hike. 

3. Housing market demand

As mentioned earlier, the inventory and housing supply is quite low in the market. Furthermore, the poor demand of buyers caused by the rising inflation and home prices has created a balance in the market. However, if the housing demand in Texas starts to rise, there isn’t much supply to cater to the high demand. 

4. Credit scores

Borrowers’ creditworthiness can also impact mortgage rates. Those with higher credit scores may be eligible for lower rates, while those with lower credit scores may have to pay higher mortgage rates as a compensation for the added risk.

5. Competition Among Lenders

If there are multiple lenders competing in the local market, the rates might be lower to attract borrowers.

Parting Thoughts!

Whether you’re looking to purchase your first home, refinance your current mortgage, or stay up-to-date with the latest trends in the Texas real estate market, make sure to reach out to Raheema Ashfaq – a leading realtor – to find the best real estate deals. 

Get in touch today!

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