Black Knight Financial Services, Inc. (NYSE: BKFS) on Monday said 425,000 borrowers who had been underwater on their mortgages regained equity in the first quarter of 2016, bringing the national negative equity rate down to 5.6%, according to the company's Mortgage Monitor Report based on data from the Black Knight Home Price Index through the end of May. That rate was down from nearly 29% at the end of 2012 but still roughly five times what it was in 2004.
Among other findings:
- 38 million borrowers now have at least 20% equity in their homes, at an average of $116,000 per borrower.
- 2.8 million borrowers remain in negative equity, down 13% from last year; nearly five times as many as in 2004.
- Cash-out refinances made up 42% of all refinance transactions in Q1 2016; $20 billion in equity extracted.
- Non-current mortgage rates are 38% higher for borrowers also carrying student loan debt than those without.
- Prepayment speeds on ARMs up 8% from last year while down 4% on fixed-rate loans.
- ARM share of originations at lowest level in nearly three years.
"As we approach the 10-year anniversary of the pre-crisis peak in U.S. housing prices, we're just under 3% off that June 2006 peak nationally, and 23 states have already passed their 2006 peaks," said Ben Graboske, executive vp of data and analytics at Black Knight. "The result is that equity levels are rising nationwide for the most part."
Black Knight merged credit bureau data with its McDash loan-level mortgage database to examine performance metrics on mortgage originations going to borrowers with student loan debt, finding that the share of such originations has risen in recent years. In fact, the share of originations with student loan debt hit a new high in 2014 (the most recent full year's data available) at 19% of all originations. 15% of all active mortgage holders have some level of student loan debt, representing an increase of over 40% over the past 10 years.
As was reported in Black Knight's most recent First Look release, other key results include:
- Total U.S. loan delinquency rate: 4.25%
- Month-over-month change in delinquency rate: 0.36%
- Total U.S. foreclosure pre-sale inventory rate: 1.13%
- Month-over-month change in foreclosure pre-sale inventory rate: - 3.55%
- States with highest percentage of non-current loans: MS, LA, NJ, ME, AL
- States with lowest percentage of non-current loans: MT, SD, MN, CO, ND
- States with highest percentage of seriously delinquent loans: MS, LA, AL, AR, RI