Black Knight reports equity pullbacks due to decelerating home price growth

Consequently, tappable equity, or the amount a homeowner can borrow against while keeping a 20% equity stake, declined for the 10th consecutive quarterly record high in the second quarter to $11.5 trillion. Month over month, total tappable equity was down 5%, and Black Knight expects another reduction in Q3, which would mark the first quarterly decline in three years.

“It’s really important to note that the market is in perhaps the best possible position to weather a correction right now,” Black Knight wrote in the report.

If every mortgage home in the US were to see its value fall by 5%, approximately 275k homes would be underwater. But even with a universal 14.5% decline in prices, negative equity rates would still be nowhere near the levels seen during the Great Financial Crisis.

Black Knight also highlighted how rising interest rates have affected how much equity is being withdrawn from the market and how borrowers are withdrawing that equity.