The Data & Analytics division of Black Knight, Inc. released its latest Mortgage Monitor Report, based upon the company’s industry-leading mortgage, real estate, and public records datasets. This month’s report looks at the continued, unprecedented levels of home price growth, and the impact that growth is having on mortgage lending and borrower behavior. According to Black Knight Data & Analytics President Ben Graboske, home price appreciation continues to break records, with ramifications that stretch across the real estate and mortgage markets.
“The Black Knight HPI shows home prices in May up nearly 18% from the same time last year,” said Graboske. “Frankly, home values are appreciating at rates we’ve simply never seen before, as low-interest rates, ultra-scarce inventory, and increasingly competitive homebuyers combine to create a truly unprecedented market.”
The report also found that, with tappable equity at record highs and interest rates remaining relatively low, cash-outs are starting to make up a larger share of refinance lending, especially with rate/term refis on the decline. Nearly half of all tappable equity – the amount available to a homeowner with a mortgage to borrow against before hitting a maximum 80% combined loan-to-value (CLTV) ratio – is held by borrowers with current interest rates of 3.75% or higher, providing many homeowners with the opportunity to simultaneously reduce their interest rates while also tapping into record levels of available equity.
Indeed, Black Knight’s Optimal blue rate lock data shows 42% of refinance loans locked through the first three weeks of June were cash-outs, the highest such share in more than two years. On the other side of the spectrum, nearly a quarter of tappable equity is held by borrowers with sub-3% interest rates. This could create increased demand for second-lien home equity lending (including HELOCs) in the coming years should 30-year rates continue to rise, making cash-out refinances a less attractive route to accessing equity for such homeowners.
Edited by Maryssa Gordon, Senior Editor, Price of Business Digital Network