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Texas A&M Real Estate Research Center: Texas Residential Mortgage Industry Optimism Wanes Through Rising Rates



Optimism waned in Texas’ residential mortgage industry amid higher interest rates, according to the latest Texas Residential Mortgage Survey (TRMS). General business activity corrected downward after improvements during the first half of the year, and challenges persist heading into 2024.

“Higher mortgage interest rates hammered home purchase and refinance origination volumes in September,” said Wes Miller, senior research associate at the Texas Real Estate Research Center at Texas A&M University (TRERC). “Decreased activity pulled down revenue and led to additional payroll cuts that have percolated across the industry over the past year.”

Decreased employment reflects changes across Texas’ broader professional and business services sector that stalled last fall and has contracted this summer. In addition to decreased hiring activity, TRMS respondents reported fewer hours worked per week for the first time since December.

“The normal seasonal downturn in home sales has been magnified by the lack of affordability created by higher home values and higher interest rates,” said Matt Kiker, president of the Texas Mortgage Bankers Association (TMBA). “We expect the slow pace to continue until rates stabilize, which many predict will occur late in the second quarter next year. While Texas mortgage bankers do not expect lower interest rates or an increase in housing supply, there are still opportunities for Texas homebuyers.”

Affordability constraints affect the entire market, but TRMS respondents anticipate an increase in the number of pre-approved customers looking for homes over the next six months. These customers typically have higher incomes and solid credit profiles that are necessary to overcome recent financial constraints.

The monthly survey is a collaborative effort between the TMBA and TRERC to provide contemporaneous analysis of changes and conditions in the residential mortgage industry.

Funded by Texas real estate licensee fees, TRERC was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers, and the public.




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