ICE Mortgage Monitor: Historically Strong Home Price Growth Pushes U.S. Mortgage Holders’ Tappable Equity to Record $11T
- Though rising rates have dampened purchase demand and allowed for modest inventory growth, a continuing deficit of homes for sale this spring is helping prices remain resilient
- According to the ICE Home Price Index, prices rose 1.2% in March, more than 25% above the 25-year average increase, marking the third consecutive month of above-average home price gains
- On an annual basis, home price growth eased slightly in March to +5.6% from an upwardly revised +6.0% in February
-
Strong home price growth in early 2024 increased mortgage-holder equity to a record
$16 .9T in Q1, $11T of which can be leveraged while retaining a 20% equity cushion – also an all-time high -
48M
U.S. homeowners with mortgages have some level of such tappable equity, at an average of$206K per borrower, up from$185K at the same time last year - Two thirds of all tappable equity is held by homeowners with credit scores of 760 or higher, making for a relatively low-risk lending cohort
-
An equal share – two thirds – is held by homeowners with first lien mortgage rates below 4%, with 84% (
~$9 .2T) held by those with rates lower than 5% -
Just five
West Coast metros –Los Angeles ($1 .1T),San Francisco ($648B ),San Jose ($348B ),San Diego ($331B ), andSeattle ($324B ) – account for nearly a quarter ($2 .7T) of total tappable equity - Homeowners in these markets not only hold some of the largest volumes of tappable equity but also have rates well below the national average as higher loan balances tend to provide more frequent refi incentive
- Second lien home equity products remain particularly attractive options for such borrowers wanting to access some of this abundant equity while maintaining their historically low first lien rates
Though
"The recent trend of rising interest rates has dampened homebuyer demand and allowed the inventory of homes for sale to improve,” said Walden. “We’re still very much in a hole from an inventory perspective, but that deficit has fallen from 50% a year ago to 38% in March. Today, with 3.3 months of supply, inventory is still historically low and indicative of a seller’s market. This is helping to keep home price growth resilient even though demand is down. In fact, despite some minor slowing, March marked the third consecutive month of stronger than average growth.”
The ICE Home Price Index for March showed the annual rate of growth easing slightly from an upwardly revised 6.0% in February to 5.6% in March. Prices were up a seasonally adjusted +0.42% month over month in March, a pullback from February’s +0.58%. On an unadjusted basis, however, prices rose +1.2% from the month prior, more than 25% above the 25-year average gain of +0.96% for the month of March.
“Such strong price gains continue to plague would-be homebuyers in today’s higher-rate environment, but for existing homeowners the picture keeps growing brighter,” Walden added. “Homeowners with mortgages closed out the first quarter of 2024 with just a hair under $17T in home equity – an all-time high. Of that, a record $11T is tappable, meaning available for a homeowner to leverage while retaining a 20% equity cushion in the property. On average, that works out to roughly
In total, approximately 48M mortgage holders have some amount of tappable equity in their homes that could be accessed even under relatively conservative combined loan-to-value (CLTV) ratio limits. From a risk perspective, total market CLTV – the current value of all mortgaged residential properties against all underlying first and second lien debt – fell to 44.6% in Q1 2024, down from 45.9% entering the year. The share of underwater mortgages continued to dwindle, with fewer than 390K borrowers nationwide (0.72% of all active loans) owing more than their homes are currently worth. Overall, two thirds of the nation’s tappable equity is held by borrowers with credit scores of 760 or higher, making for a relatively low risk cohort for lenders.
“Just five
Other findings from the ICE Home Price Index for March show the northeastern
Meanwhile, each of
Much more information on these and other topics can be found in this month’s Mortgage Monitor.
About Mortgage Monitor
ICE manages the nation’s leading repository of loan-level residential mortgage data and performance information covering the majority of the overall market, including tens of millions of loans across the spectrum of credit products and more than 160 million historical records. The combined insight of the ICE Home Price Index and Collateral Analytics’ home price and real estate data provides one of the most complete, accurate and timely measures of home prices available, covering 95% of
ICE’s research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for the monthly Mortgage Monitor Report. To review the full report, visit: https://www.icemortgagetechnology.com/resources/data-reports.
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