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Tappable Equity Hits 10-Year High

Phil Hall
Apr 03, 2017
Today's first-time homebuyer is older and more likely to be single than first-time homebuyers in the 1970s and 1980s, according to a new Zillow analysis

An annual home price appreciation of 5.5 percent during 2016 helped to increase the number of mortgage holders with tappable equity to 39.5 million, according to new data from Black Knight Financial Services (BKFS). More than two-thirds of the tappable equity level belongs to borrowers with current interest rates below today’s 30-year interest rate.
 
Tappable equity—which is defined as the amount of lendable equity available to a borrower before hitting a combined loan-to-value ratio of 80 percent—reached the $4.7 trillion mark last year. An equity growth of $570 billion throughout 2016 pushed the total equity level to its highest level since 2006.
 
“Cash-out refinance data suggests that they have been increasingly tapping that equity, though perhaps more conservatively than homeowners had in the past,” said Black Knight Data & Analytics Executive Vice President Ben Graboske. “In the fourth quarter of 2016, $31 billion in equity was extracted from the market via first lien refinances. While that was the most equity drawn in over eight years, borrowers are still tapping equity at less than a third of the rate they were back in 2005, and they’re doing so more prudently. In fact, the resulting post-cash-out loan-to-value-ratio was 65.6 percent, the lowest on record.”
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