Underwater Borrower Level Drops Below 2M Mark

For the first time in 11 years, the number of underwater borrowers fell below the two million mark, according to new data from Black Knight Financial Services (BKFS).

 

During the first quarter, the number of underwater borrowers declined by 16 percent as 350,000 borrowers regained equity. As a result, the total underwater population was down to 1.8 million in the first three months of this year. Since last year, the underwater population declined by nearly one million borrowers since last year, a 35 percent year-over-year plummet.

 

Black Knight also determined that nearly half of the nation’s remaining underwater borrowers are living in the bottom 20 percent of homes by price in their markets. At the other end of the spectrum, the company determined that tappable equity has risen by $695 billion from last year, bringing total lendable equity to just under $5 trillion; more than 40 million homeowners have tappable equity available today, which is the largest population ever recorded.

 

“What stands out is the disparity we see in this improvement,” said Black Knight Data & Analytics Executive Vice President Ben Graboske. “As has been the case for some time now, negative equity has become more and more a localized phenomenon. But it’s also becoming concentrated among a particular class of homeowner. Nearly half of all borrowers who remain underwater own homes in the lowest 20 percent of prices in their respective markets. While the nation as a whole now has a negative equity rate of just 3.6 percent, among owners in that lowest price tier, it’s over eight percent. In fact, these lowest-price-tier properties are more than twice as likely to be underwater as those in the next price tier up, and 6.5 times more likely to be underwater than those living in the top 20 percent of the market. This is the highest differential we’ve seen between high- and low-price tiers since we began keeping track in 2005.”

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