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Tappable Equity Surpasses $6 Trillion for First Time; 44 Million Homeowners with Mortgages Now Have Tappable Equity

Total tappable equity – the amount of equity available to homeowners with mortgages to borrow against before hitting a maximum 80 percent combined loan-to-value ratio – reached a record high.

Tappable equity grew by $256 billion in Q2 2018, bringing total growth for the year to $636 billion.

  • There is now nearly three times as much tappable equity available than at the bottom of the market in 2012
  • Even so, there was a noticeable slowing in equity growth from Q1 to Q2 2018, largely due to slowing home price growth in some of the nation’s most equity-rich locations and price segments
  • Although Q2 is typically the strongest quarter for home price gains, this year’s appreciation was just 2.7 percent – the lowest second quarter gain in five years, after coming off a five-year high for first quarter growth
  • Slowing price gains in the nation’s most equity-rich markets drove the overall decline in equity growth
  • The top 10 markets ranked by tappable equity accounted for 60 percent of equity growth in Q1 2018, but due to slowing home price gains, they made up just 33 percent of Q2 2018 growth
  • Higher interest rates appear to continue negatively impacting home equity utilization

Rising interest rates continue to negatively impact home equity utilization. While the $65 billion in equity withdrawn via cash-out refinances or HELOCs was a seasonally expected increase from Q1 2018, this was down by more than three percent from the same period last year.

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