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April 2022 Mortgage Monitor

May Sees Least Affordable Housing Market in 16 Years While Existing Mortgage Holders Gain Record $1.2 Trillion in Tappable Equity in Q1 2022

  • U.S. home prices are up 42% since the start of the pandemic, with the average home having gained almost 9% in value just since the start of 2022
  • Though the annual rate of appreciation cooled slightly (19.9% in April vs. an upwardly revised 20.4% for March), rising home prices and interest rates have made for the worst affordability since July 2006
  • The monthly principal and interest (P&I) payment on the average-priced home with 20% down is nearly $600 (+44%) more than it was at the start of the year and $865 (+79%) more than before the pandemic
  • As of May 19, with 30-year mortgage rates at 5.25%, the share of median income required to make that P&I payment had climbed to 33.7%, just shy of the 34.1% high reached in July 2006
  • While tightening affordability is hampering prospective homebuyers, the home price growth at the root of the issue continues to increase the housing wealth of current homeowners with mortgages
  • U.S. mortgage holders saw their collective tappable equity – the amount available to borrow against while retaining at least a 20% equity stake in the home – increase by $1.2 trillion in Q1 2022 alone
  • In total, mortgage holders gained $2.8 trillion in tappable equity over the past 12 months – a 34% increase that equates to more than $207,000 in equity available per borrower

JACKSONVILLE, Fla. – June 6, 2022 – Today, the Data & Analytics division of ICE released its latest Mortgage Monitor Report, based upon the company’s industry-leading mortgage, real estate and public records datasets. While rising home prices and volatile interest rates continue to compound the affordability pressures in the housing market, the same dynamics have also served to increase the housing wealth of American mortgage holders by a significant margin. According to Data & Analytics President Ben Graboske, tappable equity – the amount available for mortgage holders to borrow against while retaining a 20% equity stake in their homes – has reached yet another all-time high.

“Home price growth cooled – albeit very slightly – in April,” said Graboske. “While a downward shift from 20.4% to 19.9% annual growth is hardly cause for concern, it’s also likely we’ve not yet seen the full impact of recent rate increases. Rather, April’s decline is more likely a sign of deceleration caused by the modest rate increases in late 2021 and early 2022 when rates first began ticking upwards. The March and April 2022 rate spikes will take time to show up in repeat sales indexes. That said, price growth thus far has created a very difficult environment for prospective homebuyers to navigate. The monthly P&I payment required for the average home purchase is up nearly $600 since the start of the year, and factoring in current income levels housing is now within a whisper of the record low affordability seen at the peak of the market in 2006. Even modest increases in either rates or home prices at this point would push us over that line.

“There’s another side to this story, though; one of significant equity growth among current homeowners. With the average-priced home up 42% in value since the start of the pandemic, current homeowners with mortgages are sitting on an average $207,000 in equity that they could choose to tap while still keeping a 20% equity buffer in place. That’s a result of an astonishing $1.2 trillion gain in tappable equity in the first quarter of 2022 alone – the largest such quarterly growth ever recorded. In total, American mortgage holders have more than $11 trillion in tappable equity, also a history-making total. It really is a bifurcated landscape – one that grows ever more challenging for those looking to purchase a home but is simultaneously a boon for those who already own and have seen their housing wealth rise substantially over the last couple of years. Depending upon where you stand, this could be the best or worst of all possible markets.”

The Mortgage Monitor also looked at another key contributing factor to home prices and affordability – record-low for-sale inventories. Despite seeing a rise of 27,500 from March to April, active listings remain 67% below pre-pandemic levels, with 820,000 fewer listings than would be typical at this point in most homebuying seasons. New listing volumes were up 1% from the same time last year, but remained 11% below pre-pandemic levels for the month of April, suggesting that the number of homes hitting the market remains well below what would be considered “normal” levels.

The continued lack of supply continues to weigh on home sales and keep prices higher than they might otherwise be given current affordability metrics. In recent years, a 20.5% payment-to-income ratio has been a rough tipping point at which appreciation begins to soften, but given the severity of inventory shortages, home prices continue to rise – even as that ratio has climbed to 33.7%, just shy of the 34.1% high reached in July 2006.

About Mortgage Monitor

The Data & Analytics division of Black Knight 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 Black Knight HPI 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.

Black Knight’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.blackknightinc.com/data-reports/

About Black Knight

Black Knight, Inc. (NYSE:BKI) is an award-winning software, data and analytics company that drives innovation in the mortgage lending and servicing and real estate industries, as well as the capital and secondary markets. Businesses leverage our robust, integrated solutions across the entire homeownership life cycle to help retain existing customers, gain new customers, mitigate risk and operate more effectively.

Our clients rely on our proven, comprehensive, scalable products and our unwavering commitment to delivering superior client support to achieve their strategic goals and better serving their customers. For more information on Black Knight, please visit www.blackknightinc.com.

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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Media Contacts

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704.890.8158
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Katia Gonzalez
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