Mortgage Industry In Texas: Size And Scope

The residential mortgage industry in Texas is a significant sector, with the state's large and diversified economy ranking among the biggest in the world. Texas boasts major metro areas like Houston and Dallas, and Austin has also gained popularity in recent years. The state's mortgage market has experienced fluctuations, with rates rising after historic lows in 2021, impacting origination volumes. Texas has agencies and regulations in place, like the Department of Savings and Mortgage Lending, to oversee the industry and protect consumers. The market is influenced by various factors, including population growth, diverse industries, and economic trends, making it an essential aspect of the state's overall economic landscape.

The Texas Residential Mortgage Survey (TRMS)

The latest TRMS reveals a positive outlook for the Texas residential mortgage industry, with optimism at its highest level in 18 months. Respondents anticipate improvements in the next two quarters, despite a slight uptick in mortgage interest rates in February. This optimism is supported by an upward trend in origination volume and values, following a decline in 2023.

The TRMS also highlights the impact of various factors on the Texas land markets, such as mineral rights, water issues, wildlife management, and eminent domain. Texas boasts a large and diversified economy, with prominent sectors including financial services, technology, energy, and healthcare. This diversity contributes to the state's overall economic strength and influences the demand for residential mortgages.

Additionally, the survey provides insights into the business activity index, indicating improvements in the mortgage pipeline and heightened confidence in the acceleration of industry activity. The elevated reading in the February company outlook was the highest since the survey's inception. The TRMS is a valuable tool for understanding the dynamics of the Texas residential mortgage market and guiding decision-making in the industry.

Moreover, the Texas residential mortgage industry is regulated by the Department of Savings and Mortgage Lending (SML), an agency under the Finance Commission of Texas. The SML is responsible for chartering, regulating, and supervising the state's thrift industry, as well as licensing and registering the mortgage industry. These regulatory measures ensure a healthy lending environment and protect consumers in the state's residential mortgage market.

Optimism in the industry

Optimism in the Texas residential mortgage industry is currently at its highest level in almost 18 months, according to the latest Texas Residential Mortgage Survey (TRMS). The survey, a collaborative effort between the Texas Mortgage Bankers Association (TMBA) and the Texas Real Estate Research Center (TRERC), gauges current conditions and expectations in and around the state's residential mortgage industry.

The TRMS results indicate that industry players expect conditions to improve over the next two quarters. This optimism is underpinned by several factors. Firstly, Texas is a large and diversified state with one of the biggest economies in the world. Its dynamic economy encompasses thriving sectors such as financial services, technology, energy, and healthcare. This economic strength fuels demand for housing and commercial real estate, driving the mortgage market.

Additionally, Texas's growing population contributes to the need for more housing, further stimulating the mortgage industry. Moreover, the state has witnessed a post-pandemic real estate boom, with Fannie Mae predicting 2020 as a record year for residential mortgage originations. While interest rate hikes in 2022 and 2023 slowed down transaction volumes, the industry is showing signs of recovery.

The TRMS findings align with the broader context of the US mortgage market, which is experiencing a welcome recovery after the financial crisis of 2007-2008. The COVID-19 crisis of 2020, despite its challenges, had a relatively milder impact on real estate prices due to swift economic interventions. This, coupled with historically low mortgage rates during the pandemic, has contributed to the current positive outlook. While rates have climbed since then, they remain attractive for buyers, and the overall market is showing resilience.

The role of the Department of Savings and Mortgage Lending

The Department of Savings and Mortgage Lending (SML) is a Texas state agency that has been in operation since at least 2021. It is under the oversight and jurisdiction of the Finance Commission of Texas.

The SML has two primary areas of regulatory responsibility:

• The chartering, regulation, and supervision of the state's thrift industry.
• The licensing, registration, and regulation of the state's mortgage industry.

These two areas of responsibility cover the majority of residential mortgage lending in Texas. The SML's role is to promote and protect a healthy mortgage lending environment in the state.

The SML publishes reports on mortgage lending in Texas, such as the 2024 Report on Mortgage Lending in Texas. It also issues announcements, such as the New Required Loan Processing and Underwriting Log, which took effect on January 1, 2025.

The SML is based in Austin, Texas, and can be contacted via phone.

The impact of the COVID-19 crisis

The COVID-19 crisis had a significant impact on the mortgage industry in Texas. In the early days of the pandemic, many lenders tightened their lending standards to mitigate risk. Some lenders increased their minimum credit score requirements or asked for larger down payments. However, as the economy improved, some lenders relaxed their standards again.

The pandemic also led to a record number of mortgage forbearance requests. Many homeowners in Texas were left out of work due to COVID-19 and were granted permission to delay their mortgage payments. The mortgage industry reassured borrowers that this would not be considered a credit event and would not hurt their credit.

Mortgage rates dropped to historic lows during the pandemic, making it more affordable for borrowers to purchase homes or refinance their existing mortgages. This, along with a limited supply of homes for sale, caused a boom in refinance activity. The Federal Reserve then raised interest rates in 2022 and 2023, which led to a transaction volume slowdown.

Despite the pandemic, demand among homebuyers in Texas remained high. Mortgage applications fell 17.9% in the first week of March 2020, but 78% of National Association of Realtors members reported no change in buyer interest as a result of COVID-19.

Current mortgage rates in Texas

The Texas residential mortgage industry is currently experiencing an upward trend in origination volume and values. Optimism in the industry is the strongest it has been in almost 18 months, according to the latest Texas Residential Mortgage Survey (TRMS). This is despite mortgage rates trending upward after remaining at record lows during the height of the COVID-19 pandemic.

Mortgage rates in Texas have fluctuated, but they have generally remained high in 2025. As of January 18, 2025, the mortgage rates in Texas were 6.779% for a 30-year fixed mortgage, 5.820% for a 15-year fixed mortgage, and 7.265% for a 5-year adjustable-rate mortgage (ARM). These rates are in line with national averages, which stood at 6.779% for a 30-year fixed-rate mortgage and 5.82% for a 15-year fixed-rate mortgage as of March 29, 2025.

It's important to note that mortgage rates can change daily, and even multiple times a day. Additionally, personalized mortgage rates may vary based on an individual's credit profile, property type, loan-to-value (LTV) ratio, and debt-to-income (DTI) ratio. A higher DTI ratio, for example, may result in higher interest rates and costs.

When considering a mortgage in Texas, individuals have several loan options available, including conventional mortgages, Federal Housing Administration (FHA) loans, and Texas VA loans for veterans or active-duty military members. Each option has its own set of qualifications and requirements, such as minimum credit scores and down payment amounts.

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