Many homeowners used some of their home equity via a cash-out refinance when rates were dropping. “Tappable equity” rose to $200K per home in 1Q 2022.
NEW YORK – The Federal Reserve reports that total U.S. home equity surged nearly 20% in the first quarter to a record $27.8 trillion.
While rising home values boosted the finances of American homeowners, rising mortgage rates have made it more expensive for homeowners to use that equity. According to Black Knight reports, about 60% of withdrawn equity in 2021 was accessed via cash-out refinances. However, refinances have dropped as mortgage rates rise
Black Knight’s report finds that tappable equity – the amount homeowners can borrow and still retain at least 20% of the home’s equity – increased a record $1.2 trillion in the first quarter to more than $11 trillion. Almost 75% of it belonged to borrowers with mortgage rates below 4%.
According to Black Knight, average tappable equity available to Americans with mortgages jumped to a record $207,000 in the first quarter.
According to CoreLogic, equity gains likely will spur a record amount of home-improvement spending this year.
Source: Wall Street Journal (06/15/22) McCaffrey, Orla
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