Home Price Increases Are Negating Low Rates: Black Knight

Home price gains across the country are reducing the positive benefits homeowners will feel from low rates, according to Black Knight Financial Services.

The Jacksonville, Fla.-based company reported Monday in its Mortgage Monitor report for March that interest rates have fallen about 35 basis points since the beginning of 2016. That contraction, according to Black Knight's calculations, would equate to savings of approximately $44 per month.

But that's before rising home prices are thrown into a mix. While borrowers might expect that $44 per month savings home price appreciation, which Black Knight calculated at an annual rate of 5.3% in February, it would shrink that savings to just $18 per month nationwide.

The impact of higher home prices gets worse in certain states though. In Washington, Colorado and Oregon, higher home prices have completely negated the savings from low interest rates.

"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," said Ben Graboske, Black Knight's senior vice president of data and analytics, in a news release Monday.

But Graboske cautions that homeowners shouldn't ignore the benefits they still get from lower rates.

"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," he said.

Falling mortgage rates have also added 2.3 million borrowers to the refinanceable population year-to-date, for a total of 7.5 million nationwide.

Black Knight also reported that the total U.S. delinquency rate is now 4.08%, representing a drop of 8.37% from the previous month to put the figure below the average from 2000 to 2005. Black Knight noted that the serious delinquency and the 90-day delinquency rates remain elevated.

Mississippi was the state with the highest percentage of noncurrent loans in the report, while Arkansas had the lowest percentage.

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