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New American Focus:
Mortgage & Real Estate

New American Focus: Mortgage & Real Estate

Translating the complexity of the markets into a concise and easy to digest format. Watch videos, read blogs, and view key data on short and medium term trends impacting interest rates, so you can make the right decision for your situation.

Cash-Out Refinances Just Hit a 15-Year High

Model house on money |Cash-Out Refinances Just Hit a 15-Year High

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.

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