A new report from the Data & Analytics division of Black Knight, Inc. shows that homeowners gained $1 trillion in tappable equity in Q2, as home prices continued to rise.
In its latest Mortgage Monitor Report, researchers found that the amount available for homeowners with mortgages to borrow against while still retaining at least 20% equity in their homes now stands at $9.1 trillion, an astonishing 37% year-over-year gain.
“This is by far the strongest growth we’ve ever seen and equates to some $173,000 in equity available to the average mortgage holder, a $20,000 increase in just three months,” said Data & Analytics President Ben Graboske. “Some 98% of homeowners in forbearance now have at least 10% equity in their homes. Even when we add in 18 months of forborne payments – including principal, interest, taxes and insurance – the share with less than 10% equity only climbs to 7%, about 135,000 homeowners. This is a drastically different dynamic than during the worst of the Great Recession, when more than 40% of all mortgage holders had less than 10% equity and 28% were fully underwater.”
Black Knight concluded that such strong equity positions should help limit the volume of distressed inflow into the real estate market as well as provide strong incentive for homeowners to return to making mortgage payments – even if needing to be reduced through modification.
While originations fell 5% from Q1, Q2 marked the 4th consecutive quarter with over $1 trillion in total mortgage lending, and the 5th consecutive with at least 2.2 million refi originations.
The 1.1M cash-out refinance loans originated in Q2 was the largest quarterly volume in nearly 15 years, with more than$63B in equity withdrawn in the quarter – the most since mid-2007.