Buying a home is likely to get more affordable this spring as declining prices and interest rates give 6.0 percent more purchasing power while keeping monthly payments the same or a decrease of $62 per month in principal and interest on the average home, according to Black Knight's latest Mortgage Monitor Report. The report indicated that annual home price growth has slowed for 10 consecutive months falling from 6.8 percent year-over-year in February 2018 to 4.6 percent at the end of the year. As a result, the average value of a home has also decreased by $850 in December. The declining values also indicate that it would now take 22.2 percent of median income to purchase a home with a 20 percent down payment and a 30-year fixed-rate loan.
The report indicated that declining rates are also boosting refinancing of loans -- with 3.27 million homeowners likely to qualify for a refinance and reduce their current interest rate at least by 0.75 percent by doing so. The report noted that the recent rate declines could also result in increased cash out lending, which had softened last year as "equity utilization became more expensive in 2018." "While this is all welcome news for consumers heading into the spring home buying season, it remains to be seen whether recent rate declines and easing affordability will be enough to halt the deceleration in home price growth," said Ben Graboske, President of Black Knight's Data and Analytics Division.