Housingwire is reporting that Black Knight will report that Tappable Equity will hit an all-time high of $6.3 trillion according to their 2nd quarter data. Black Knight, which considers themselves as a leading provider of integrated software, data and analytics solutions that facilitate and automate many of the business processes across the homeownership life cycle quarterly reports on tappable equity. Tappable equity is defined as the share of equity available for homeowners with mortgages to borrow against before reaching a maximum total combined LTV of 80%.
The report indicates that owners have tappable equity of $140,000 available to borrow against. In the second quarter tappable equity increased by $335 billion. The $6.3 trillion amount is 26% higher than the peak in 2006. About 55% have interest rates that are at least 0.75% higher than current rates and have credit scores at or above 760. “Nearly half of the 45 million homeowners with tappable equity have 1st lien interest rates at or above 4.25%, making refi an attractive option” Black Knight stated.
One of the biggest reasons for the increase is because mortgage rates have fallen. Freddie Mac notes that 30-year fixed mortgage fell to a three-year low of 3.55% last week. When mortgage rates fall, purchasers can obtain bigger mortgage and therefore bid on more expensive housing. According to the Mortgage Bankers Association (MBA) rates should average around 3.7% for the remainder of 2019. The rate for 2020 will probably be around 3.8% according to the MBA.
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