Mortgage holders continued to see their equity grow in Q2 2024. According to the August 2024 Mortgage Monitor Report from data services company Intercontinental Exchange (ICE), nine out of 10 mortgage holders in the U.S. currently have some level of tappable equity. Approximately two-thirds of this equity is held by mortgage holders with credit scores of 760 or higher, and those with first lien rates below 4%. Additionally, fewer than 325,000 homeowners are underwater on their mortgages, representing just 0.60% of active loans, while another 4.2% have less than 10% equity. Right now, the market is experiencing record-high mortgage debt, however overall market leverage is near all-time lows, explains Andy Walden, ICE vice president of research and analysis.
“Outstanding mortgage debt, including both first and second liens, hit an all-time high in June, but growth in home prices has outpaced that gradual rise in debt,” said Walden. “Total cumulative debt leverage – essentially a loan-to-value ratio for the entire mortgage market – is equivalent to 44.1% of underlying home values, the third lowest leverage ratio we’ve seen in the past 20-plus years. Rising home prices have also continued to build the fortunes of existing homeowners, pushing tappable equity – the amount a mortgage holder can leverage while retaining a healthy 20% equity cushion – to its highest level ever.”
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