- Home equity hits record $6.5T in Q1 2020
- 75% of mortgage holders of that $6.5T tappable home equity have interest rates above 3.5%
- Amount saved on monthly basis likely to outweigh cost of refinancing transaction
According to Black Knight, American homeowners hit a record high $6.5T in tappable home equity in Q1 2020. More than 75% of homeowners with equity to borrow against while leaving a 20% buffer have interest rates on their mortgages above 3.5%. With interest rates currently near 3%, the cost of securing refinancing on those mortgages would be less than the amount these mortgage holders would glean on a monthly basis from such lower rates.
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This is information you as a real estate professional might well consider passing along to your home-owning clients. Even if you clients already are aware of this information, your reaching out to them with the information clearly and proactively tells them that you are looking out for their best interest.
Black Knight’s report states, “Driven by record-low 30 year mortgage rates, the first quarter saw overall refinance lending climb to a 7-yeart high. At the same time, the number of cash-out refinances, as well as the dollar value of equity withdrawn via refinance, fell for the first time since early 2019.”
Cash-out refinancing represented 42% of refinance loans in Q1. This 42% was the lowest share of refinance loans in four years plus the $38.7B in equity withdrawn from cash-out refinancing was down -8% from Q4 2019.
Obviously rising home prices are driving the amount of equity homeowners have in their properties. According to the National Association of REALTORS® (NAR), the median price of an existing home has risen +4.9% in both 2018 and 2019. NAR speculates that existing home prices will rise some +3.6% in 2020.
Even if your home owning clients are not considering putting their home on the market right now, they’ll enjoy hearing from you that both their property prices and home equity are increasing while they don’t have to do a thing except enjoy the security and safety of their homes.
Thanks to Black Knight, National Association of REALTORS® and Housing Wire.