Mortgage Rates in Texas Are Falling Slower Than Almost Every Other State
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Despite all the talk about how high mortgage rates have been, they’ve actually been creeping down this year. That being said, borrowers in some states enjoyed steeper decreases than others. Unfortunately for prospective homebuyers in Texas, the Lone Star State came in near the bottom of the barrel.
A recent WalletHub ranking of mortgage rate decreases across the United States between Q1 2025 and Q2 2025 put Texas at No. 49 with a 7.71% dip. Only Vermont saw a smaller decrease.
Interestingly enough, Texas was the only southern state to rank in the bottom 10. Meanwhile, southern states comprised half of the top 10 states, including Alabama at No. 1 (16.65%) and Mississippi at No. 2 (16.47%).
“Interest rates on mortgages can vary by state because each state has a unique supply and demand profile, including varying home prices,” Texans Credit Union CFO Ben Hart told CandysDirt.com. “Interest rates on mortgages consider a multitude of factors including the Federal Reserve’s baseline interest rates, risk, the supply of homes, and competition among lenders.”
The average mortgage rate in Texas in Q2 2025 came in at 6.44%. Only nine states had rates averaging 6% or higher.
“In Texas, mortgage rates may have declined at a lesser pace … because sustained demand for homes and relatively lower prices have justified a 6% interest rate in the market,” Hart said.
Demand has been high with hundreds of thousands of relocations to the Lone Star State in recent years, so much so that officials in Austin passed a slew of bills this legislative session to boost the housing supply. The hope is that more stock will help get home prices under control.
“It’s a difficult time to buy a house, given that home prices have risen astronomically over the past few years and housing shortages make it hard to find the right place even if you have the money,” said WalletHub analyst Chip Lupo, speaking about the national situation.
In Texas, the median price of a home last month was $335,245.
The Federal Reserve issued its first benchmark interest rate cut since December 2024 earlier this month. While mortgage rates aren’t directly tied to the benchmark, they tend to move in the same direction, and prospective buyers sitting on the sidelines have been hoping for better rates before jumping into the market.
“Although interest rates are still down a bit from the highs we saw two years ago, they’re a far cry from the historic lows during the pandemic,” Lupo said.
Mortgage rates got down to the 2-3% range during that period, a bit lower than where they were at around 2016. The latter period is having a significant impact on today’s market, with homebuyers from that time locked into way more favorable rates than exist today. With money that cheap, it’s hard to justify moving into a new home that’s likely more expensive at up to triple the rate.
Nationally, the 30-year is sitting at 6.3%, according to Freddie Mac. More relief may very well come from the Federal Reserve, but buyers will still have to contend with sky-high home prices.
