Rising Home Equity: U.S. Reaches Record Numbers


Picture of house and money

Rising Home Equity: U.S. Reaches Record Numbers

This Week in Real Estate, Black Knight announced available homeowner equity has reached a record sum. U.S. homeowners were sitting on more than $6 trillion worth of collective tappable home equity at the end of June. Below are a few highlights from the second week of September that influence our business:

Mixed Mortgage News: Refis Fall to Four-Year Low, But Purchases Climb Sharply

The signs were all there. It was clear that refinance originations were trending down as interest rates rose, but it’s still striking to see the results in black and white. According to newly released data from ATTOM Data Solutions, refinance originations fell to a four-year low during the second quarter, thanks to increases in interest rates.

ATTOM’s Q2 2018 U.S. Residential Property Loan Origination Report, released Thursday morning, shows that there were 2,087,455 residential mortgages originated in Q2 2018, up 15% from the previous quarter and up less than 1% from a year ago. The results are bit of mixed bag, as purchase mortgages rose sharply over the previous quarter, while refis dropped to the lowest level since the first quarter of 2014.

Broken down by type, there were 926,516 purchase mortgages originated in Q2 2018, up 39% from the previous quarter and up 1% from a year ago. There were 799,093 refis originated in Q2, down less than 1% from the previous quarter and down 2% from a year ago, falling to a nearly four-year low. Additionally, there were 361,845 Home Equity Lines of Credit originated in Q2 2018, up 4% from the previous quarter and up 2% from a year ago to the highest level since Q3 2008.

CoreLogic: 12.4% Year-Over-Year Increase in Mortgage Fraud Risk For the Second Quarter

On Thursday, CoreLogic released its latest Mortgage Fraud Report showing a 12.4 percent year-over-year increase in fraud risk at the end of the second quarter, as measured by the CoreLogic Mortgage Application Fraud Risk Index. The analysis found that during the second quarter of 2018, an estimated one in 109 applications, or 0.92 percent of all mortgage applications, contained indications of fraud, compared with the reported one in 122, or 0.82 percent in the second quarter of 2017.

“This year’s trend continues to show an increase in mortgage fraud risk year over year,” said Bridget Berg, principal of Fraud Solutions Strategy for CoreLogic. “Because home prices are rising, and demand is strong, most mortgage fraud in this type of market is motivated by bona fide borrowers trying to qualify for a mortgage. Undisclosed real estate liabilities, credit repair, questionable down payment sources and income falsification are the most likely misrepresentations.”

Homeowners Are Sitting on $6 Trillion in Available Cash, But They’re Not Tapping It

As prices continue to rise, so too does the amount of home equity available for homeowners to tap; and it has now reached a record sum, according to Black Knight. Tappable equity is the amount most lenders will allow borrowers to cash out, while still keeping 20 percent equity in the home.

Borrowers gained $636 billion in the first half of 2018, pushing the total amount to nearly three times as much equity as there was at the housing market’s bottom in 2012. It is also 21 percent more than there was at the pre-crisis peak in 2006. Approximately 44 million homeowners with mortgages can now access cash through cash-out refinances or home equity lines of credit (HELOCs). On average, per person, that’s about $138,000.

Homeowners withdrew about $65 billion in home equity in the second quarter of this year. The draw was actually down 3 percent from the same period a year ago. Homeowners withdrew just 1.13 percent of tappable equity, the lowest share since the start of 2014. “At this point last year, homeowners were tapping 17 percent more of available equity than today, which suggest that if rates on cash-out refinances and HELOCs had held steady, we’d see about $13 billion more equity being accessed.”