by Calculated Risk on 9/07/2022 10:43:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Black Knight Mortgage Monitor: "Total market leverage was just 42% of mortgaged homes’ values, the lowest on record"

A brief excerpt:

Most homeowners have a significant amount of equity and will not be “underwater” if house prices decline. This is an important difference compared to the housing bubble when many millions of borrowers had little or no equity even before house prices declined. As Black Knight notes in their monthly Mortgage Monitor report released this morning:

Overall, the market is on strong footing to weather a correction; total market leverage as of Q2 – including both first and second liens – was just 42% of mortgaged homes’ values, the lowest on record

The first graph shows Black Knight’s estimate of tappable equity.

• Tappable equity – the amount a homeowner can borrow against while keeping a 20% equity stake – hit its 10th consecutive quarterly record high in Q2 2022 at $11.5T but appears to have peaked in May of this year

• Escalating declines in June and July have total tappable equity down 5% over the past two months, suggesting a sizeable reduction is likely in Q3, which would mark the first quarterly decline in three years

There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/