Increase in Tappable Equity Seen in 2022, Decline Predicted for This Year

Mortgage News April 13, 2023

Last year saw an increase in the amount of equity that homeowners could extract, but this year’s forecast suggests that much of that gain will be lost. Among all states, California still holds the highest amount of tappable equity.

TransUnion’s Home Equity Trends Report Q4 2022 showed that the number of active home-equity accounts increased from 10.3 million in the previous year to 10.9 million in the fourth quarter of 2022. Out of the total, 71 percent were HELOCs, while HELOANs represented the remaining 29 percent.

During the most recent three-month period, the median combined loan-to-value (CLTV) ratio for all properties stood at 20 percent, while the average CLTV ratio was 31 percent. However, when free-and-clear properties were excluded, the average CLTV ratio increased significantly to 54 percent, considering only mortgaged properties.

At the end of last year, the tappable equity in U.S. residential properties reached $19.5 trillion. This figure represents 80 percent of the total value of these properties, minus the outstanding balances on first mortgages and junior liens. Compared to the fourth quarter of 2021, tappable equity increased by $1.8 trillion.

TransUnion had previously predicted that tappable equity would reduce to $18.1 trillion by the fourth quarter of this year.

California holds approximately $4.6 trillion of the total tappable equity in the United States, with an average available amount of $394,000. New York follows next with an average of $329,000, followed by Florida with $223,000, North Carolina with $154,000, and Georgia with an average of $147,000.

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