Mortgage refinance candidates swelled by 2 million in May

The most borrowers in three years currently qualify for refinancing as the average for the 30-year fixed-rate mortgage dropped below 4% for the first time in over a year, according to Black Knight's Mortgage Monitor.

Refinance candidates — measured as those who would save at least 75 basis points in the interest rate on their loan — ballooned to 5.9 million at the end of May. Additionally, slowing home price appreciation aided affordability for both current and new homeowners.

March's year-over-year home price growth went to 3.8%, the first time it slipped below the 25-year average of 3.9% since 2012. It marks 13 straight months of annual home price deceleration. Month-over-month appreciation also fell, going to 1% compared to a 1.25% rate a year ago.

"Falling rates have already had a positive impact on affordability. In fact, the monthly payment needed to purchase the average-priced home with a 20% down payment has declined by 6% in the last six months," Ben Graboske, executive vice president of data and analytics at Black Knight, said in a press release.

"It currently requires $1,173 per month to make that purchase, the lowest such payment in more than a year. When we factor income into the equation, we see that it takes 22% of the median income to purchase the average-priced home. That's the lowest payment-to-income ratio in more than a year as well, and far below the long-term average of 25.1%," Graboske continued.

The growth rate of prices decreased in 85 of the 100 largest housing markets over the last 12 months. San Jose, Calif., posted the lowest annual growth rate of all metro areas, a decline of 6.1%. San Francisco's 0.1% gain and Baton Rouge, La., with a 0.3% rise followed.

The opposite end of the spectrum saw Boise City, Idaho, at 11.8%, Spokane, Wash., at 10.9%, and Ogden, Utah, at 9.5%, lead year-over-year price appreciation for March.