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Surprise! More Home Equity = More Cash-Out Refinances
Monday, October 5, 2015
While they aren't doing it at nearly the rate they did
before the Great Recession, Americans are increasingly tapping the equity in
their homes with cash-out refinancing. Black
Knight Financial Services says in its latest Mortgage Monitor Report released on Monday that cash-out refinances
in the second quarter were at the highest rate in five years.
Lack of equity prevented many homeowners from refinancing at
all for a number of years and they could not take advantage of the historically
low interest rates. Now rising home
prices have restored many to positive equity positions and even to having "tappable"
equity based on an 80 percent combined loan-to-value (CLTV) ratio. Black Knight says total home equity is at its
highest level since 2007, up nearly $1 trillion since last year, about $19,000
more per borrower. Fifty-nine percent of
that equity or about $4.5 trillion, is tappable.
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