American homeowners are house rich, sitting on a record amount of home equity.
Taking advantage of all that extra cash, however, becomes more difficult as interest rates rise.
Soaring housing demand over the past year and a half, driven in large part by the pandemic, caused home prices to spike. There simply wasn’t enough supply to meet the demand. Prices have now climbed close to 20% from a year ago.
As a result, homeowners gained a massive amount of tappable equity — the sum borrowers can generally take out of their homes while still leaving at least 20% as a cushion. By the end of the third quarter, borrowers had a record $9.4 trillion in tappable home equity collectively, or an average of $178,000 per borrower, according to Black Knight, a mortgage data and analytics firm.
That marks a 32% jump year-over-year.