According to the latest Texas Residential Mortgage Survey, despite higher interest rates, Texas' residential mortgage industry expressed an improved outlook in July 2023. The bright spot for current conditions was the stable increase in pre-approved customers looking for homes.
"Respondents to the TRMS have consistently reported monthly improvements in their company outlook this year," said Wes Miller, Senior Research Associate at the Texas Real Estate Research Center at Texas A&M (TRERC). "They've maintained that position amid a recent rebound in mortgage interest rates that has hindered both origination volumes and average values."
The TRMS business-activity index notched five consecutive positive readings to start the year but stalled in June and July. Activity pulled back in the home-purchase segment of the market, but the refinance segment has yet to find its footing in the post-pandemic economy.
"The persistently high interest rate environment has continued to suppress the refinance market," according to Erin Dee, Chief Operating Officer with LoanPeople LLC. "Over 90 percent of all homeowners have interest rates below 6 percent. With current 30-year fixed mortgage rates averaging 6.81 percent (Freddie Mac), there are very few incentives for homeowners to refinance their existing-home loans outside of opportunities to draw on their equity."
The average value of refinance originations is expected to fall further during the second half of the year, but TRMS respondents anticipate a stabilization in rate-and-term origination volumes if mortgage rates tick downward.
"The Mortgage Bankers Association, however, expects interest rates to remain at elevated levels through 2023, keeping mortgage origination volumes dampened through spring 2024," Dee said.