Escalating home prices generated a record $1.2 trillion gain in usable equity for borrowers in the first quarter of the year, Black Knight reports.
Mortgage holders enjoy a total of $11 trillion in workable equity, or $207,000 per borrower, also the highest on record, according to the April Black Knight Mortgage Monitor report. House prices rose 19.9% in April, down slightly from the 20.4% annual gain recorded in March.
“Depending on your position, this could be the best or the worst of all possible markets,” Ben Graboske, president of Black Knight Data and Analytics, said in a statement.
Potential home buyers in April faced the worst affordability in nearly 16 years. In May, it took 33.7% of median income, or $1,958, to make a monthly principal and interest payment on an average-priced home with a 30-year mortgage rate of 5.25%, Black said. Knight. This figure is a hair below the 34.1% share in June 2006, the height of the housing market of that time.
According to the report, mortgage rates exceeding 5.35% or house prices rising another 1.1% could drive affordability to a new record high. Rates have however flattened last week amid financial market concerns about slowing economic growth. The deceleration in house prices in April was likely a reflection of modest rate increases earlier this year, Black Knight said, and the recent 5% threshold crossover could be reflected in future sales indices.
refinance continued their slide in April and are down 54% over the past 12 months, driven by an 80% annual freefall in rate/term refis, according to the report. Withdrawal refis accounted for 75% of all refis in the first quarter, up from 36% last April. In total, mortgage holders withdrew more than $75 billion in equity through cash remittances, the highest volume in 15 years, according to Black Knight.
Borrowers in dire straits also improved their position, with the national delinquency rate falling 1.3% to a record high of 2.8% in April, according to the report. Overdue payments of 30 to 60 days increased by 8%, but overdue payments of 90 days or more fell by 7.8%.
The number of forbearances fell by nearly 37,000 in April, but as of mid-May 645,000, or 1.2% of all mortgages, remained in active forbearance, according to Black Knight. The combined outstanding balance between the forborne loans was $115 billion.
Prepayment activity also fell 19.1% to a 3-year low in April, Black Knight reported. Total prepayment activity remains down 61.8% from a year ago as rates continue to rise.