Tappable equity hit a new record high in the second quarter

Tappable equity hit an all-time high in the second quarter of 2019, as the second consecutive quarterly increase continued the reversal of fortunes from the second half of 2018.

Sneak-peak data from Black Knight Inc. reveals that 45 million US homeowners with a mortgage had $6.3 trillion in tappable equity – defined as the equity available to borrow before reaching an 80% combined LTV.

Although home price growth has slowed, meaning a reduction in tappable equity, the second quarter saw an increase of 4.2% compared to the 3% of the previous quarter.

The $6.3 trillion total is the highest volume ever recorded and 26% above the mid-2006 peak of $5 trillion.

The story gets better, as 49% of the homeowners with tappable equity have 1st lien interest rates at or above 4.25%, meaning they could be looking to refinance; 76% have rates above 3.75% and tap equity without affecting their rate much or perhaps slightly improving it.

Good credit

The cohort of homeowners with tappable equity generally have good credit scores; 55% of those with current interest rates of 4.25% and above have credit scores of at least 760 and another 16% have credit scores between 720 and 759.

The average homeowner with tappable equity has $140K available to borrow against.