Black Knight: Mortgage Holders Lose $1.3 Trillion in Equity in Q3 as Price Correction Continues; Nationally, Homes Shed 2.6% of Value Over Past Three Months
"Also, as we've covered in prior Mortgage Monitors, the vast majority of homes at risk of falling underwater are those that were purchased in 2022 and late 2021, at or near pandemic-era peak prices. While these loans clearly deserve careful, ongoing monitoring, to put that into context, just 3.6% of nearly 53M U.S. mortgage holders are either underwater or have less than 10% equity in their homes -- roughly half the share coming into the pandemic. While additional declines may be on the horizon, homeowner positions broadly remain strong. Overall mortgage holder equity is still $5T (+46%) above pre-pandemic levels, for an average gain of more than $92K per borrower during that period. Of course, this -- along with rising interest rates -- increases the potential for even further headwinds in equity lending as well as heightened default risk."
- As Black Knight Data & Analytics President Ben Graboske explains, after peaking in Q2 of this year, homeowner equity saw record levels of contraction in Q3 2022.
- "In the span of just three months, U.S. mortgage holders saw a total of $1.3T in newly acquired equity evaporate," said Graboske.
- "That is -- by far -- the largest quarterly decline on record by dollar value and the largest since 2009 on a percentage basis.
- From a risk perspective, we've already seen the number of underwater borrowers more than double alongside the equity pullback.