ICE: Record Levels of Tappable Equity in Q3

(Image courtesy of ICE; Breakout image courtesy of Pixabay/pexels.com)

Intercontinental Exchange Inc., Atlanta, reported that mortgage holders at the end of the third quarter held $17.2 trillion in equity. Of that, $11.2 trillion was deemed tappable–meaning it can be borrowed against with the homeowner still maintaining a 20% equity stake.

The average homeowner has $319,000 in equity in their home, with $207,000 of that tappable.

Some homeowners are taking advantage of that–Q3 withdrawals hit a two-year high–but the total represented just 0.42% of tappable equity. That’s well below the 10-year average 0.92% extraction rate.

There was $27 billion equity withdrawn via second-lien products and $21 billion withdrawn via cash-out refinances–both also are at two-year highs but still below typical levels.

 “Despite a two-year high for equity withdrawals in the third quarter, homeowners are still tapping their housing wealth at less than half the rate they have historically,” said Andy Walden, ICE Vice President of Research and Analysis. “Over the past 10 quarters homeowners have extracted $476 billion in equity, exactly half the extraction we’d expect to see under more normal circumstances. That equates to nearly a half a trillion untapped dollars that hasn’t flowed back through the broader economy.”

Introductory rates on HELOCs have topped 9.5%, ICE noted, but if market expectations for additional Federal Reserve cuts and other factors hold true, HELOC rate offerings could drop to the low 7% range by year-end 2025.  

The industry fallout from hurricanes Helene and Milton also is top of mind–ICE reported that 4.9 million mortgage holders were in the path of the storms, or affected by flooding. They carry a combined $1 trillion in unpaid principal balances.

Almost half a million (429,000) got hit by both storms, and 1.2 million were impacted by Hurricane Beryl in early July.

Early impacts from Hurricane Helene can be seen in September mortgage performance–an estimated 3,500 mortgage holders are having difficulty making payments, the report stated. However, full impact won’t be seen until October and November reports.