Although the average sale price in June was up 3.3% year-over-year, the typical mortgage payment fell 6.1% thanks to a 0.8% annual drop in mortgage rates, according to the latest information from CoreLogic. [1]
The typical mortgage payment had increased annually every month for the past three years, it had its first decline in May, when it fell around 3%. Median sale prices in June 2018 were up 5% annually and the typical mortgage payment was 14% higher than the prior year due to a 0.7% increase in mortgages rates from 2017.
CoreLogic states the typical mortgage payment rose year-over-year each month last year, with increases averaging 13%.
The CoreLogic Home Price Index Forecast suggest annual gains in home prices from July 2019 and into June 2020, averaging 4.5%. Additionally, the typical mortgage payment during that same period is expected to drop 4.4%, and the average decline for the last six months of the year will be 7.6%.
CoreLogic states this trend is driven by the expectation that the rate on a 30-year fixed rate mortgage from July 2019 to June 2020 will be 0.7% lower than its current number. Freddie Mac reported mortgage rates rose slightly [2] last week to 3.56%.
Despite the hike, mortgage rates haven’t been below 3.6% for four-consecutive weeks since Q4 2016.
According to CoreLogic, mortgage payments in June 2019 remained 31.8% below the all-time high of $1,287 recorded in June 2006. Mortgage rates in June 2006 averaged 6.7%. The median sales price in June 2006 was $249,232 ($197,000 in 2006 dollars) compared to June 2019’s average of $235,433.
Along with mortgage payments falling over the past year, CoreLogic states that homebuyers are gaining more power with annual income gains. Personal disposable income rose about 3.3% during the first two quarters of the year.
The slight increase in mortgage rates did cost nearly 2 million borrowers eligibility for refinancing, according to a report by Black Knight. [3]
Black Knight states that the refinancing population fell back to 9.8 million. The refinance population was at a record 11.7 million last week week when the average mortgage rate was 3.49%.