Black Knight: Tappable Equity at Record $6.3 Trillion

Black Knight, Jacksonville, Fla., said after falling through the second half of last year, tappable equity saw its second consecutive quarterly increase, hitting a record high $6.3 trillion in the second quarter.

The report said tappable equity–defined as the share of equity available for homeowners with mortgages to borrow against before reaching a maximum total combined loan-to-value of 80%–grew by $335 billion in the second quarter.

Black Knight noted although tappable equity growth had been slowing in recent quarters due to rising interest rates and slowing home price growth, the second quarter growth rate was slightly above the first quarter (4.2% vs. 3%).

The report said 45 million U.S. mortgage holders now hold $6.3 trillion in tappable equity, the highest volume ever recorded, and 26% above the mid-2006 peak of $5 trillion. Nearly half (49%) of homeowners with tappable equity have first lien interest rates of less than 4.25; 76% have rates at or above 3.75%

“These folks could potentially tap into home equity with little change to their existing 30-year rate, or perhaps even a slight improvement,” Black Knight said. “This is also a relatively low risk group, including the majority of those with interest rates above today’s prevailing rate.”

The report said the average homeowner with tappable equity has $140,000 available to borrow against.

“Savings have increased significantly since before the Great Recession, so the household balance sheet is just in a better position,” MBA President and CEO Bob Broeksmit, CMB, told CNBC’s Diana Olick. “Perhaps the need to tap that equity is a little bit lower and there is a little bit more discipline among consumers.”