Thanks in large part to the consistent rise in home prices, homeowners are tapping into their growing home equity more often than they have in more than a decade.
According to a new report from Black Knight, cash-out refinances hit a 15-year high in the second quarter. The report showed that overall mortgage originations fell by 5% from the first quarter to the second quarter. However, the second quarter was the fourth straight quarter with more than $1 trillion in mortgage originations.
The second quarter was also the fifth consecutive quarter with at least 2.2 million refinances. Of those, 1.1 million were cash-out refis, the most cash-out refis in any quarter in 15 years. In total, homeowners withdrew more than $63 billion in equity from their homes in the second quarter.
And even though 1.1 million borrowers did a cash-out refi in the second quarter, the amount of equity that the remaining homeowners have just keeps growing to previously unheard-of levels.
According to the report, homeowners now have a total of $9.1 trillion of “tappable equity” in their homes. Black Knight defines “tappable equity” as the amount available for homeowners with mortgages to borrow against while still retaining at least 20% equity in their homes.
That $9.1 trillion in tappable equity is a record high, $1 trillion above the previous record high, set in the first quarter of this year.
In total, homeowners gained $1 trillion in tappable equity in the second quarter, which Black Knight Data & Analytics President Ben Graboske notes is “by far the strongest growth we've ever seen.”
According to the report, less than 3% of mortgage holders have less than 10% in equity in their homes, the lowest that figure has even been.
"Tappable equity grew an astonishing 37% year-over-year in Q2 2021, driven by increasing gains in home values over the quarter," Graboske said.
“As a result, already at a record high of $8.1 trillion at the end of Q1, U.S. homeowners with mortgages gained another $1 trillion in tappable equity in the second quarter alone,” Graboske added. “This is by far the strongest growth we've ever seen and equates to some $173,000 in equity available to the average mortgage holder, a $20,000 increase in just three months.