‘Tappable’ Equity Up 16% in 1Q

Black Knight, Jacksonville, Fla., said “tappable equity”–the share of home equity available for homeowners with mortgages to borrow against–grew by more  than 16percent from a year ago.

Black Knight said tappable equity grew by $380 billion in the first quarter alone, the largest single quarterly growth volume of lendable equity since Black Knight began tracking such data in 2005. It noted the first and second quarters typically see strongest tappable equity growth.

Over the past 12 months, Black Knight said tappable equity rose by $820 billion, up by 16.5 percent. It said homeowners now hold $5.8 trillion in tappable equity, 16 percent higher than the previous peak in mid-2006 to the highest volume it has recorded.

The report said rising home prices is driving the increase in tappable equity, increasing by 2.5 percent in the first three months of 2018 alone, representing nearly $7,000 for a median-priced U.S. home. Declining loan-to-value ratios are also contributing: Black Knight said average LTV is down to 52 percent, suggesting the majority of home price gains are “immediately eligible to be tapped. “Over 70 percent of all Q1 equity growth is immediately tappable under an 80 percent CLTV limit,” the report said, the highest share since the housing recovery began.

“This is a group for whom home equity lines of credit would generally be more attractive than cash-outs,” the report said. “It’s also a relatively low-risk group, especially those with low current interest rates on their first lien.”

The report said the average homeowner with a mortgage gained $14,700 in tappable equity over the past year and has $113,900 in total, but those numbers are much higher in some places, particularly some places in California. In San Jose, for example, the average homeowner with a mortgage gained $191,500 in immediately tappable equity in the past 12 month. The average mortgage holder in San Jose now has $695,000 in tappable equity.