With home prices largely recovered from the crash, affordability is once again a concern for the average American home buyer. In fact, there has been a lot of discussion recently about whether higher prices will lead to a drop in buyer demand or if still low mortgage rates and a better job market will help keep demand high and affordability conditions favorable. According to Black Knight Financial’s latest Mortgage Monitor, demand is still healthy but home price increases have begun to cut into the amount of savings buyers can expect from historically low rates. For example, without factoring in home price movement, recent mortgage rate declines would be saving buyers approximately $44 a month on their monthly payment. However, when including the rate of price gains, that savings falls to $18. Ben Graboske, Black Knight’s data and analytics SVP, says home prices are muting the effect low mortgage rates are having on housing affordability. “By and large, borrowers are still seeing net reductions in monthly payments across the country heading into the early home buying season,” Graboske said. “In some areas though, prices are appreciating so quickly that they may have fully offset any savings from rate declines.” However, declining mortgage rates have had a positive impact on housing affordability. According to Graboske, without falling rates, buyers would have been paying an additional $28 a month for the median-priced home compared to the end of last year. More here.