Fewer than 325,000 homeowners are underwater on their mortgages nationwide, putting just 0.60% of active loans in a negative equity position, with another 4.2% holding less than 10% equity in their homes, according to the latest Mortgage Monitor report from ICE Mortgage Technology.
However, negative equity rates are increasing in certain markets – in Texas, Florida and Louisiana, in particular – where there has been a surge of new inventory combined with reduced demand due to prospective homebuyers waiting for lower mortgage rates.
As a result, home prices in these markets are softening, putting more homeowners in negative equity positions.
In Austin, for example, home prices are more than 15% off 2022 peaks, resulting in some 2.6% of mortgage holders owing more than their homes are currently worth, according to the report.
Similarly, in San Antonio, 2.7% of homes are underwater.
Negative equity rates are also rising in Florida, as Cape Coral, Lakeland, North Port and Jacksonville – where inventories have surged and home prices are softening – have all seen an increase in negative equity, ICE says.
The same is true of New Orleans and Baton Rouge in Louisiana.
Nationwide, 84% of underwater mortgages were originated within the past 3.5 years; that share climbs above 97% in areas like San Antonio, Austin, Cape Coral and North Port, where prices have pulled back from recent highs.
Despite the slight increase in negative equity rates in certain markets, total home equity held by U.S. mortgage borrowers hit an all-time high of $13.8 trillion in June, according to ICE.
What’s more, tappable equity – the amount a borrower can access while maintaining a healthy 20% equity cushion – also hit a new peak in June at $11.5 trillion, an increase of 4% compared with the first quarter and up 9.2% year over year.
Photo: Kaleb Tapp