'Tappable' Home Equity At Highest Level Ever

A new report from Black Knight Financial Services says available home equity is currently at the highest level on record, $5.4 trillion. The current peak is 10 percent higher than in 2005, the pre-recession high. 

Some are forecasting how this surge will impact homeowner borrowing patterns. CNBC reports that roughly three-quarters of borrowers with tappable equity have interest rates lower than the current rate, making them more likely to use home equity lines of credit (HELOCs). Ben Graboske, executive vice president of Black Knight Data & Analytics says, "Over half of all tappable equity, approximately $2.8 trillion, is held by borrowers with credit scores of 760 or higher and first-lien interest rates below today's prevailing rate, which creates a large pocket of low-risk HELOC candidates."

Unlike during the last peak, homeowners today are far more conservative and lenders are stricter. Last year, even with record equity, homeowners took out only $262 billion via cash-out refinances or home equity lines of credit, or HELOCs. While that is another post-recession peak in dollars, it is less than 1.25 percent of all available equity, a four-year low ... "Home prices have grown a cumulative 48 percent since 2011 and are up 5.9 percent through the first two months of this year," said Lawrence Yun, chief economist for the National Association of Realtors. 

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