What Homeowners Are Doing With All This Home Equity
Tappable home equity for homeowners reaches an all-time high, according to Black Knight data; today’s mortgage rates and the 5-day interest rate trend; and, New Home Sales pops to its second-highest point in ten years.
U.S. Home Equity Hits All-Time High
U.S. homeowners have more home equity for cashing out than any time in history.
New research from Black Knight shows tappable home equity topping $5.8 trillion nationwide, the highest record level in history.
The mortgage data firm defines tappable home equity as home equity readily available to homeowners as part of a cash-out refinance transaction; generally, up to 80 percent of a home’s value.
Tappable home equity climbed by approximately four hundred billion dollars during the first three months of the year, which is also a record; and, homeowners are putting their blossoming home equity to use.
According to Freddie Mae’s most recent Refinance Report, a quarterly analysis that details refinance activity among U.S. homeowners, $18 out of every $100 refinanced through the year’s first quarter was a “cash out” dollar — the highest percentage of cash-out dollars since 2008.
Homeowners do cash-out loans for a multitude of reasons:
- Pay off student loan debt
- Retire credit card debt and pay down bills
- Home improvement projects
Others do cash-out refis to diversify, changing their “dollars on paper” to cash; converting equity into something tangible of value before the markets get a chance to take it away in the future.
Rising mortgage rates don’t slow the pace of cash-out refinances so if you’ve earned home equity since your date of purchase, get with a mortgage loan officer to discuss your tappable home equity options.
Today’s Mortgage Rates & Interest Rate Trends
Mortgage rates are improved today.
For the fourth day in the last five, mortgage interest rates are down; good news to buyers of homes and households wondering whether it’s a good idea to refinance.
There’s an obvious benefit for today’s FHA-backed homeowners who want to cancel FHA mortgage insurance premiums, and for homeowners looking at a cash-out refinance. Streamlined refinance programs also seem strong.
Here’s a look at today’s mortgage rate action:
- Conforming mortgages: Lower
- FHA mortgages: Lower
- VA mortgages: Lower
- USDA mortgages: Lower
- Jumbo mortgages: Lower
Mortgage rates are individual. They vary by lender and by borrower. There are more than a dozen factors that affect your rate quote so don’t expect the same rate as your neighbor, your friend, or your family.
You’ll also get different rates from different companies because of mortgage pricing among lenders. Talk to two or more lenders, then, to make sure you’re not paying more than necessary.
Talk to three lenders, if you can. Shop for your preferred combination of rates, fees, and service.
Get Today’s Mortgage Rates
Buyers Jumping On New Construction Home
Home buyers snapped up new construction homes in May.
According to the Census Bureau’s New Home Sales report, U.S. home buyers purchased new homes at a seasonally-adjusted, annualized rate of 689,000 in May.
The reading represents a 14 percent jump from a year ago, marking the second-highest tally since ten years ago.
There are now fewer than three-hundred thousand newly-built homes for sale nationwide which, at the current pace of sales, would each be sold in 5.2 months.
Analysts believe that home supply of fewer than six months suggests a seller’s market. For buyers, that means higher prices and worsening home affordability.
The good news is that new construction homes are dropping in price, in general.
As compared to the start of the year, the median sale price of a new construction home is off more than five percent, reducing the size of down payment required to buy a new home; and, making it easier for home buyers to qualify.
Veterans can buy new homes with no money down. The general public needs just 3 percent down.
If your plans to buy a home include new construction, talk to a real estate agent about what’s currently for sale and what’s about to be built in your area.
Buying new homes is different from buying “used” ones. It helps to work with a professional.