The amount of equity available to American homeowners with mortgages grew $256 billion in the second quarter of 2018 to break the $6 trillion mark, according to a Monday data release from analytics firm Black Knight.
That brings the total tappable equity gain for 2018 to $636 billion, according to the Jacksonville, Fla.-based company — a figure that’s three times higher than the most recent market bottom in 2012.
“Despite the noticeable slowing in home price appreciation over the past four months that Black Knight has reported on recently, some 44 million homeowners now have equity that could be tapped via cash-out refinances or home equity lines of credit (HELOCs),” Ben Graboske, executive vice president of Black Knight’s analytics division, said in a statement announcing the results.
The company defines “tappable” home equity as the level that homeowners can access before hitting a loan-to-value ratio of 80%.
The news wasn’t all positive: Graboske noted that the home equity gains cooled off between the first and second quarters, and the 2.7% Q2 increase in home prices was the smallest over the last five years. In addition, just because homeowners have amassed that level of equity doesn’t mean they’re tapping it. Equity withdrawn through cash-out refinances or HELOCs declined 3% year-over-year in the second quarter, representing the smallest proportion of overall equity tapped since the first quarter of 2014.
“This suggests that rising interest rates may be suppressing home equity utilization by approximately 17%, resulting in homeowners tapping into $13 billion less equity than they may have otherwise,” Black Knight observed in its analysis.
Written by Alex Spanko