Price appreciation helped hundreds of thousands of borrowers regain equity in the first quarter – but there are still five times more underwater borrowers now than in 2004
The number of U.S. borrowers who are underwater on their mortgage has dropped by 13% from last year, but 2.8 million still remain in negative equity, according to new data.
The latest Black Knight Financial Services Mortgage Monitor Report, released today, found that strong home price appreciation has helped hundreds of thousands of borrowers regain equity. About 38 million now have at least 28% equity in their homes, at an average of $116,000 per borrower.
“As we approach the 10-year anniversary of the pre-crisis peak in U.S. housing prices, we’re just under 3% off that June 2006 peak nationally, and 23 states have already passed their 2006 peaks,” said Ben Graboske, executive vice president of data and analytics at Black Knight. “The result is that equity levels are rising nationwide for the most part. In Q1 2016, 425,000 borrowers who had been underwater on their mortgages regained equity, bringing the national negative equity rate down to just 5.6%. That’s a far cry from the nearly 29% of borrowers who were underwater at the end of 2012, but still about five times as many as in 2004.”
The first quarter also saw tappable equity grow by about $260 billion, according to Black Knight – a 6% increase in the first three months of the year.
“It seems borrowers are still being prudent when it comes to drawing upon that equity, though,” Graboske said. “Just $20 billion in equity was tapped via cash-out refinances in Q1 2016 – roughly one half of one percent of total available equity. Even so, cash-outs still accounted for some 42% of all refinance activity in Q1 2016.”
Black Knight also looked at non-current mortgage rates, finding that they’re 38% higher among borrowers who are also carrying student loan debt. According to Black Knight, 15% of all active mortgage holders have some level of student loan debt – a 40% spike over the last 10 years. Black Knight found that borrowers who were severely delinquent on student loan debt were five times more likely to be delinquent on their mortgages than those who were current on their student loan debt, and six times more likely to be delinquent than mortgage borrowers with no student debt.
The latest Black Knight Financial Services Mortgage Monitor Report, released today, found that strong home price appreciation has helped hundreds of thousands of borrowers regain equity. About 38 million now have at least 28% equity in their homes, at an average of $116,000 per borrower.
“As we approach the 10-year anniversary of the pre-crisis peak in U.S. housing prices, we’re just under 3% off that June 2006 peak nationally, and 23 states have already passed their 2006 peaks,” said Ben Graboske, executive vice president of data and analytics at Black Knight. “The result is that equity levels are rising nationwide for the most part. In Q1 2016, 425,000 borrowers who had been underwater on their mortgages regained equity, bringing the national negative equity rate down to just 5.6%. That’s a far cry from the nearly 29% of borrowers who were underwater at the end of 2012, but still about five times as many as in 2004.”
The first quarter also saw tappable equity grow by about $260 billion, according to Black Knight – a 6% increase in the first three months of the year.
“It seems borrowers are still being prudent when it comes to drawing upon that equity, though,” Graboske said. “Just $20 billion in equity was tapped via cash-out refinances in Q1 2016 – roughly one half of one percent of total available equity. Even so, cash-outs still accounted for some 42% of all refinance activity in Q1 2016.”
Black Knight also looked at non-current mortgage rates, finding that they’re 38% higher among borrowers who are also carrying student loan debt. According to Black Knight, 15% of all active mortgage holders have some level of student loan debt – a 40% spike over the last 10 years. Black Knight found that borrowers who were severely delinquent on student loan debt were five times more likely to be delinquent on their mortgages than those who were current on their student loan debt, and six times more likely to be delinquent than mortgage borrowers with no student debt.
