Black Knight Financial Services released its latest Mortgage Monitor Report today showing the home loan data as of the end of March 2016. One of the key points Black Knight focused upon in the report was how lower mortgage interest rates have impacted housing affordability.

They found that falling mortgage rates save borrowers a significant amount of money both on home purchases and refinancing which is no surprise. Black Knight said that homeowners who were able to refinance their mortgage has grown by 2.3 million in the two months since it last report, for a total of 7.5 million borrowers.

In the last 12 months, approximately one million homeowners have reached 20 percent equity in their homes, and 80% loan to value (LTV) in order to easily qualify for a refinance.

Black Knight also reported that the mortgage delinquency rate is now below the 2000-2005 average, and active foreclosures are still rather high at 45% and two times above historical norms.

As was reported in Black Knight’s most recent First Look release, other key results include:

Total U.S. loan delinquency rate: 4.08%

Month-over-month change in delinquency rate:-8.37%

Total U.S. foreclosure pre-sale inventory rate:1.25%

Month-over-month change in foreclosure pre-sale inventory rate: -3.69%

“Excluding home price movement, the interest rate decline since the start of the year would save borrowers approximately $44 a month when purchasing the median-priced home nationally,” said Graboske. “However, when you factor in estimated home price appreciation (HPA) – the most recent Black Knight Home Price Index Report for February showed annual HPA at 5.3 percent – those monthly savings fall to just $18.

The mortgage on a median-priced home is still more affordable than it was in December, despite rising prices, just not as much as one might expect given that rates are as low as they are. This isn’t to say that interest rate reductions aren’t beneficial to buyers – they almost certainly are. If rates hadn’t dropped over the past four months, it would cost an additional $28 to buy the median-priced home today as compared to December 2015. By and large, borrowers are still seeing net reductions in monthly payments across the country heading into the early home buying season.

In some areas though, prices are appreciating so quickly that they may have fully offset any savings from rate declines. Assuming the HPA observed in February continues through March and April, it may actually cost home buyers more in monthly principal and interest to purchase the median-priced home in Washington, Colorado and Oregon than it did at the end of 2015, even with a 35 BPS drop in interest rates.”

States with highest percentage of non-current* loans:MS, NJ, LA, NY, ME

States with lowest percentage of non-current* loans: AK, SD, MN, CO, ND

States with highest percentage of seriously delinquent** loans: MS, LA, AL, AR, RI

Black Knight’s Data & Analytics Senior Vice President Ben Graboske had issued this statement along with the report:

“Excluding home price movement, the interest rate decline since the start of the year would save borrowers approximately $44 a month when purchasing the median-priced home nationally,” said Graboske. “However, when you factor in estimated home price appreciation (HPA) – the most recent Black Knight Home Price Index Report for February showed annual HPA at 5.3 percent – those monthly savings fall to just $18.

The mortgage on a median-priced home is still more affordable than it was in December, despite rising prices, just not as much as one might expect given that rates are as low as they are. This isn’t to say that interest rate reductions aren’t beneficial to buyers – they almost certainly are. If rates hadn’t dropped over the past four months, it would cost an additional $28 to buy the median-priced home today as compared to December 2015. By and large, borrowers are still seeing net reductions in monthly payments across the country heading into the early home buying season.

In some areas though, prices are appreciating so quickly that they may have fully offset any savings from rate declines. Assuming the HPA observed in February continues through March and April, it may actually cost home buyers more in monthly principal and interest to purchase the median-priced home in Washington, Colorado and Oregon than it did at the end of 2015, even with a 35 BPS drop in interest rates.”

SOURCE: BLACK KNIGHT FINANCIAL SERVICES

Erik Sandstrom
LoanSafe's Mortgage Expert
I'm a Senior Loan Officer and LoanSafe mortgage expert. If you need a live rate quote, or need help getting a new mortgage, please call me direct anytime at 619-379-8999.