Mortgage Rates in Houston, Texas: What to Know

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A mortgage is a specialized loan that’s used to purchase a piece of property. In most cases, this is your primary residence. However, you might also use a mortgage to fund a second home or investment property. Your mortgage rate determines how much interest you’ll pay on your loan. 

Your overall interest can add up to a hefty sum when you’re purchasing something as big as a home. As of December 2022, the median listing price for a home in Houston was $340,000. This represents a 3.1% increase over the previous year. Here’s what you need to know about your mortgage rate so you can make a wise choice when buying your next home.

How Are Mortgage Rates Determined?

The economy plays a big role in determining mortgage rates in Houston, Texas, as well as other cities across the country. When the economy is good, mortgage rates increase because borrowers can generally afford more. When the economy is bad and unemployment is high, mortgage rates typically fall since borrowers don’t have as much money to take out a loan. Mortgage rates typically fluctuate in line with:

  • The Federal Reserve.
  • The bond market.
  • The Constant Maturity Treasury (CMT) rates.
  • The Secured Overnight Financing Rate (SOFR).

In late 2019, early 2020 mortgage rates fell below 3% in response to emergency actions taken by the Federal Reserve. Over time, mortgage rates soared in line with the skyrocketing inflation and in 2022, mortgage rates have hit the highest level seen since 2002.

How Often Do Mortgage Rates Change?

Mortgage rates are constantly fluctuating, and can even change by the hour. Lenders receive a new rate sheet each day. Though the rate doesn’t always fluctuate on a daily basis, it certainly can. It’s important to talk to your lender about the loan process and locking in a great rate as soon as possible when you find favorable numbers.

Mortgage rates can change dramatically in a short amount of time. The average 30-year fixed-rate mortgage went from around 3% at the beginning of 2022 to 7% by October of the same year. As of January 19, 2023, the average 30-year fixed mortgage rate was 5.81% in Texas, down 11 basis points from 5.92% the week before. This is just two percentage points higher than the national average of 5.79% for the same day. 

Are Mortgage Rates in Houston, Texas, the Same for Every Borrower?

While you can quickly search the daily average mortgage rates in Houston, Texas, this doesn’t necessarily mean that you’re seeing the actual rate you’ll pay if you take out a mortgage at that time. Average mortgage rates are based on several assumptions, including the fact that you have a very good credit score of 740 or higher and an adequate down payment for your loan type. If this isn’t the case, your individual mortgage rate will likely differ from the averages you’re seeing online.

If you want to lower your mortgage rate, you’ll need to address the key factors that lenders look at for each individual, including:

  • Credit Score: The higher your credit score, the lower your mortgage rate. Your credit score is based on your payment history, the amount you owe, the length of your credit history, how much new credit you have, and the diversity of your credit lines. Of these five factors, your payment history and the amount you owe are the most important. Making timely payments and paying down your overall balance will help improve your credit score significantly.
  • Down Payment: The greater your down payment, the smaller your loan amount. Therefore, a hefty down payment will always decrease your monthly mortgage payment even if it doesn’t lower your mortgage rate. A down payment often does lead to a lower rate, though, because borrowers who have the funds for a down payment are less likely to default on their loans.
  • Occupancy Type: Lenders will likely change your mortgage rate based on the intended occupancy of the home. Rates are lowest for properties that will be used as primary residences since homeowners are most likely to stay on top of monthly payments for the place where they’re living. Rates are usually higher for an investment property or second home.

If you’re looking to buy a home, our team at Rock Mortgage can help you find the right loan program for your needs. We’ll assist you in preparing all your documents and securing the best mortgage rate possible.

Billy Evans

Billy Evans

Billy Evans is a Loan Officer at Rock Mortgage. As a father and family man Billy understands the importance and want to have a beautiful home to raise and grow a family in. That is why he has made it his mission to help everyone get the best mortgage solution possible to fit their financial needs. Billy is also a former United States Marine, as a Veteran himself and mortgage professional he has combined his knowledge and experience to passionately serve Veterans. When Billy isn’t working, he enjoys spending time with his wife, daughter, and their puppy Ollie!