Rising home values are making homeowners richer, a lot richer. Whether they choose to use it or not, the amount of equity today's homeowners are able to tap is at the highest level on record, according to a new report from Black Knight.
Over the course of 2017, the amount of money a borrower can take out of a home while still leaving 20 percent in it, which is what most lenders require, rose by $735 billion, the largest annual increase by dollar value on record. The brought the collective amount of so-called tappable equity to $5.4 trillion, which is 10 percent more than at the pre-recession peak in 2005.
Unlike during the last peak, homeowners today are far more conservative and lenders are stricter. Last year, even with record equity, homeowners took out only $262 billion via cash-out refinances or home equity lines of credit, or HELOCs. While that is another post-recession peak in dollars, it is less than 1.25 percent of all available equity, a four-year low.