Slower home price growth and lower mortgage rates mean home buyers are paying less on their monthly mortgage payment than a year ago. The principal and interest payment on a median-priced home—what the real estate data firm CoreLogic calls the “typical mortgage payment”—dropped in June year over year.
The U.S. median sales price in June was $235,433, up 3.3% year over year. However, the typical mortgage payment dropped 6.1%, CoreLogic reports. The decline was mostly due to decreases in mortgage rates. A year ago, the median sales price was up 5% year over year, and the typical mortgage payment surged 14% because of an increase in mortgage rates. In May, however, the typical mortgage payment posted its first annual drop in nearly three years, and home buyers started unlocking more savings.
The typical mortgage payment in June was nearly 32% lower than the all-time high of $1,287 set in June 2006.
CoreLogic forecasters predict annual gains in home prices to average about 4.5% on a monthly basis from July 2019 through June 2020. Factored in with falling mortgage rate forecasts, the typical mortgage payment likely will continue to dip and is forecasted to average a drop of 7.6% for the last few months this year, according to CoreLogic economists. “The trend is driven by the expectation that, on average, the rate on a 30-year fixed-rate mortgage during the July 2019 through June 2020 period will be about 0.7 percentage points lower than a year earlier,” researchers note at the CoreLogic Insights Blog.
Freddie Mac reported the average on a 30-year fixed-rate mortgage was 3.56% last week.