Thanks to sky rocketing home prices, tappable Equity in the third quarter of 2021 hit an all-time high, according to the latest data from Black Knight…(Black Knight)
- Tappable equity hit $9.4 trillion thanks to a $2.3 trillion year-over-year increase (+32%) in Q3 2021.
- Available equity is now $178,000 thanks to a $53,000(+42%) increase in Q3 2021.
Unfortunately, rising home prices also means owning a home gets more expensive…
- The average monthly mortgage payment now takes 22.4% of the median household income which is a 24% increase from the 18.1% at the beginning of 2021.
- This is the highest since late 2018 when 30-year rates were near 5%.
Back to the good news, rising equity stakes have pushed the average homeowner’s combined mortgage debt down to just 45.2% of their home’s value, the lowest average combined loan-to-value ratio on record.
Not surprisingly, cash-out refinances have reached 54% of all refinances in Q3 which represents $70 billion in equity being tapped, the highest withdrawal in 14 years.
- This represents just 0.8% of available equity which is less than 1/3 of what we saw during peak activity in 2005.
- Credit standards remain strong as the average credit score is 50 points than back in 2005.
Ben Graboske, Black Knight Data & Analytics President, pointed out what really separates 2021 from 2006 is equity levels…
- “The aggregate total of $9.4 trillion is up an astonishing 32% from the same time last year and nearly 90% higher than the pre-Great Recession peak in 2006.”