More U.S. homeowners tapped into their equity more during the third quarter, a report from ICE Mortgage Technology shows.
The firm’s latest Mortgage Monitor report reveals that in total, U.S. mortgage holders withdrew $48 billion of home equity in the third quarter – the largest such equity withdrawal volume in the two years since the Federal reserve first initiated its latest tightening cycle.
This includes $27 billion in equity withdrawn via second lien products and $21 billion withdrawn via cash-out refinances.
As of the end of the quarter, U.S. mortgage holders held $17.2 trillion in equity, of which $11.2 trillion is “tappable,” meaning it can be borrowed against with the homeowner maintaining a 20% equity stake in their home.
Still, U.S homeowners with mortgages continue to tap into only a fraction of their total combined available equity. Just 0.42% of available tappable equity was withdrawn in there third quarter, well below the 0.92% average extraction rate in the decade preceding the latest round of Fed increases.
Andy Walden, vice president of research and analysis for ICE, says although home equity growth is slowing along with home prices, the $17.2 trillion in total U.S. homeowner equity is “up 5% from last year” and “represents another seasonally adjusted record high.”
“Of that total, $11.2 trillion is available to homeowners with mortgages to borrow against while maintaining a 20 percent equity stake in their homes,” Walden says in the report. “On average, that works out to roughly $207,000 in tappable equity per homeowner. And we did see a bump in equity withdrawals in the third quarter, with cash-out refi extractions rising on what had been downwardly trending 30-year rates and second-lien home equity products getting a boost from rate cuts late in the quarter.”
Photo: Jennifer Grismer