Black Knight: As a result of rising home values, the average homeowner could refinance their mortgage and withdraw $173,000, while keeping 20% equity in their home.
JACKSONVILLE, Fla. – Black Knight estimates that borrowers pulled $63 billion in equity in the second quarter of 2021, the most in a single quarter in almost 15 years. There remains $9 trillion in tappable equity, a 37% year-on-year gain, due to surging home prices.
Home values have soared to such a degree that the average homeowner could refinance their mortgage and withdraw $173,000, while keeping 20% equity in their home; the sum of such tappable equity rose $20,000 for the average homeowner from the previous quarter.
Homeowners’ equity will cushion homeowners exiting forbearance, according to Black Knight’s Ben Graboske. Ninety-eight percent of homeowners still in forbearance as of mid-August have at least 10% equity, while 28% of mortgage holders were fully underwater in the last downturn.
Although mortgage originations had fallen 5% from the first quarter, it was the fourth straight quarter to post over $1 trillion in total lending, and more than 2.2 million people opted to leverage rising home values and low rates and refinance their homes.
More than 50% of borrowers who exited their forbearance plans in April and May 2020 fully repaid their mortgages, likely due to low rates encouraging refinancing – but more borrowers who are now leaving forbearance are remaining in loss mitigation programs.