Housing Market Measures

May 2024 ICE Mortgage Monitor Report

Historically strong home price growth pushes U.S. mortgage holders’ tappable equity to record $11T

The Mortgage Monitor provides a view of the current mortgage market, including loan-level performance, home price trends data, secondary market metrics and public records. Access the full report findings here.

ATLANTA & NEW YORK–(BUSINESS WIRE)–Intercontinental Exchange, Inc. (NYSE:ICE), a leading global provider of technology and data, released its May 2024 ICE Mortgage Monitor Report, based on the company’s industry-leading mortgage, real estate and public records data sets.

Though U.S. home price growth slowed modestly on an annual basis, according to the ICE Home Price Index, March marked the third consecutive occurrence of above-average monthly gains. Rising prices combined with higher interest rates have added to the affordability pressure on prospective homebuyers. Existing homeowners, on the other hand, continue to reap the benefits of historically strong price gains. Andy Walden, ICE’s Vice President of Enterprise Research Strategy, explains.

“The recent trend of rising interest rates has dampened homebuyer demand and allowed the inventory of homes for sale to improve,” said Walden. “We’re still very much in a hole from an inventory perspective, but that deficit has fallen from 50% a year ago to 38% in March. Today, with 3.3 months of supply, inventory is still historically low and indicative of a seller’s market. This is helping to keep home price growth resilient even though demand is down. In fact, despite some minor slowing, March marked the third consecutive month of stronger than average growth.”

Key Findings:

  • Though rising rates have dampened purchase demand and allowed for modest inventory growth, a continuing deficit of homes for sale this spring is helping prices remain resilient
  • According to the ICE Home Price Index, prices rose 1.2% in March, more than 25% above the 25-year average increase, marking the third consecutive month of above-average home price gains
  • On an annual basis, home price growth eased slightly in March to +5.6% from an upwardly revised +6.0% in February
  • Strong home price growth in early 2024 increased mortgage-holder equity to a record $16.9T in Q1, $11T of which can be leveraged while retaining a 20% equity cushion – also an all-time high
  • 48M U.S. homeowners with mortgages have some level of such tappable equity, at an average of $206K per borrower, up from $185K at the same time last year
  • Two thirds of all tappable equity is held by homeowners with credit scores of 760 or higher, making for a relatively low-risk lending cohort
  • An equal share – two thirds – is held by homeowners with first lien mortgage rates below 4%, with 84% (~$9.2T) held by those with rates lower than 5%
  • Just five West Coast metros – Los Angeles ($1.1T), San Francisco ($648B), San Jose ($348B), San Diego ($331B), and Seattle ($324B) – account for nearly a quarter ($2.7T) of total tappable equity
  • Homeowners in these markets not only hold some of the largest volumes of tappable equity but also have rates well below the national average as higher loan balances tend to provide more frequent refi incentive
  • Second lien home equity products remain particularly attractive options for such borrowers wanting to access some of this abundant equity while maintaining their historically low first lien rates

The ICE Home Price Index for March showed the annual rate of growth easing slightly from an upwardly revised 6.0% in February to 5.6% in March. Prices were up a seasonally adjusted +0.42% month over month in March, a pullback from February’s +0.58%. On an unadjusted basis, however, prices rose +1.2% from the month prior, more than 25% above the 25-year average gain of +0.96% for the month of March.

“Such strong price gains continue to plague would-be homebuyers in today’s higher-rate environment, but for existing homeowners the picture keeps growing brighter,” Walden added. “Homeowners with mortgages closed out the first quarter of 2024 with just a hair under $17T in home equity – an all-time high. Of that, a record $11T is tappable, meaning available for a homeowner to leverage while retaining a 20% equity cushion in the property. On average, that works out to roughly $206K in tappable equity per mortgage holder.”

Accessing Tappable Equity In Homes

In total, approximately 48M mortgage holders have some amount of tappable equity in their homes that could be accessed even under relatively conservative combined loan-to-value (CLTV) ratio limits. From a risk perspective, total market CLTV – the current value of all mortgaged residential properties against all underlying first and second lien debt – fell to 44.6% in Q1 2024, down from 45.9% entering the year. The share of underwater mortgages continued to dwindle, with fewer than 390K borrowers nationwide (0.72% of all active loans) owing more than their homes are currently worth. Overall, two thirds of the nation’s tappable equity is held by borrowers with credit scores of 760 or higher, making for a relatively low risk cohort for lenders.

Such strong price gains continue to plague would-be homebuyers in today’s higher-rate environment, but for existing homeowners the picture keeps growing brighter...

“Just five West Coast markets – Los Angeles, San Francisco, San Jose, San Diego, and Seattle – account for nearly a quarter of all tappable equity available,” Walden said. “Not only do these borrowers hold a cumulative $2.7T in tappable equity, but they also tend to have first lien interest rates well below the national average due to more frequent refinance activity among high-balance loans. The same holds true in other metropolitan areas such as New York and Washington DC, which account for another $1.1T in tappable equity. For folks like these, second lien equity products remain a particularly attractive option for tapping significant amounts of housing wealth without sacrificing a once-in-a-lifetime low rate on their existing mortgage.”

Other findings from the ICE Home Price Index for March show the northeastern U.S. continuing to experience the strongest monthly price gains, with New Haven (+1.3%) and Hartford, Conn. (+1.1%) leading the way. Together with the New York City metropolitan area (+1.0%), Boston, Mass. (+0.9%), Bridgeport, Conn. (+0.9%) and Allentown, Penn. (+0.8%), these markets notched six of the seven largest single month price gains among the nation’s top 100 metros.

Meanwhile, each of Florida’s nine largest markets saw seasonally adjusted prices edge lower, as for sale inventory has been growing sharply across the state. Inventory levels in Lakeland, Palm Bay, Deltona and Cape Coral, Fla. are all back above pre-pandemic levels, while North Port, Tampa, Orlando and Jacksonville are within 10% of 2018/2019 norms. Miami inventory has been trending higher as well, but it remains 27% below pre-pandemic levels.

Much more information on these and other topics can be found in this month’s Mortgage Monitor.

 

 

 

About Mortgage Monitor
ICE manages the nation’s leading repository of loan-level residential mortgage data and performance information covering the majority of the overall market, including tens of millions of loans across the spectrum of credit products and more than 160 million historical records. The combined insight of the ICE Home Price Index and Collateral Analytics’ home price and real estate data provides one of the most complete, accurate and timely measures of home prices available, covering 95% of U.S. residential properties down to the ZIP-code level. In addition, the company maintains one of the most robust public property records databases available, covering 99.9% of the U.S. population and households from more than 3,100 counties.
ICE’s research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for the monthly Mortgage Monitor Report. To review the full report, visit: https://www.icemortgagetechnology.com/resources/data-reports.
About Intercontinental Exchange
Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds, and operates digital networks that connect people to opportunity. We provide financial technology and data services across major asset classes helping our customers access mission-critical workflow tools that increase transparency and efficiency. ICE’s futures, equity, and options exchanges — including the New York Stock Exchange — and clearing houses help people invest, raise capital and manage risk. We offer some of the world’s largest markets to trade and clear energy and environmental products. Our fixed income, data services and execution capabilities provide information, analytics and platforms that help our customers streamline processes and capitalize on opportunities. At ICE Mortgage Technology, we are transforming U.S. housing finance, from initial consumer engagement through loan production, closing, registration and the long-term servicing relationship. Together, ICE transforms, streamlines, and automates industries to connect our customers to opportunity.
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