Unlocking the Potential: U.S. Homeowners Tap into Record Equity
Here at Extreme Investor Network, we bring you the latest insights and trends in the world of business news. Today, we are excited to discuss the recent movement in the housing market, specifically regarding homeowners tapping into their record amounts of equity.
According to ICE Mortgage Technology, in the third quarter of this year, mortgage holders withdrew a staggering $48 billion of home equity, marking the largest volume in two years since the Federal Reserve began raising its benchmark interest rate. This shift comes after homeowners have been somewhat hesitant to tap into their equity due to higher interest rates over the past couple of years.
Currently, U.S. homeowners collectively hold over $17 trillion in total equity, with approximately $11 trillion of that being tappable. This means that homeowners could potentially borrow against this equity, with most lenders requiring at least 20% equity to remain in the home. The average homeowner now has $319,000 of equity in their home, of which $207,000 is tappable.
Despite the recent increase in equity withdrawals, homeowners are still being cautious. In the third quarter, homeowners withdrew just 0.42% of all tappable equity, significantly lower than the rate seen in the decade leading up to the Fed rate hikes.
Andy Walden, ICE vice president of research and analysis, highlighted the impact of the recent rate cuts on equity withdrawals. He stated that the cost of taking out a $50,000 HELOC more than doubled over the past two years but may decrease with further rate cuts in the near future.
With the potential for additional rate cuts on the horizon, there could be positive implications for new equity lending and existing HELOC holders. This could lead to increased utilization of HELOCs, especially with homeowners sitting on record stockpiles of equity.
As home equity growth moderates and housing market conditions shift, it will be interesting to see how homeowners continue to leverage their equity. Stay tuned to Extreme Investor Network for more updates on this evolving trend in the housing market.