The share of U.S. mortgage borrowers who are equity-rich climbed to a new high last quarter as the
Equity-rich mortgages — those that have a loan-to value ratio of 50% or lower, meaning the mortgage holder's equity stake is at least half the property's worth — made up some 49% of the national total in the second quarter of this year, according to a
Renovations, already the leading use for these borrowings, increased their share to nearly two-thirds of the products' market, the Mortgage Bankers Association said.
That's up about 2 percentage points from the previous quarter — and it's higher than the peak levels reached last year before higher interest rates slowed the housing market down, at least for a while. By comparison, the share of equity-rich mortgages at the end of 2019 — before the pandemic hit — was around 27%.
"The second-quarter market revival bestowed immediate benefits on homeowners around the nation, in the form of better profits for sellers and rising equity for those staying put," said Rob Barber, Attom's chief executive officer. "Equity levels were high even during the recent downturn, and now they are going back up and better than ever."
The proportion of equity-rich mortgage-payers increased in 45 of the nation's 50 states last quarter. And even among the other five, three of them still have relatively high shares — not to mention large numbers of homeowners who don't owe anything at all.
The Attom report shows how housing has rapidly returned to being a wealth-accumulator for US households, defying the expectations of analysts who had expected a longer decline in prices thanks to steeper mortgage rates.
Less than 3% of mortgaged homes in the US were considered seriously underwater — meaning that the borrower's loan balance was at least 25% higher than the property's value — in the second quarter of 2023.
What's more, Attom found that even among the 255,700 homes facing foreclosure last quarter, some 92% of the borrowers had at least some equity, which means that the bank holding the mortgage should recover a large portion of the outstanding debt.
About 20% of seriously underwater mortgaged homes are concentrated in 45 zip codes. Among the five districts with the highest share of underwater homes, two are in New York State and two in Illinois.
