The total U.S. loan delinquency rate reached 4.71% of all loans in July – a decrease of 2.22% from June, according to Black Knight Financial Services' ‘First Look’ mortgage report.
The total foreclosure presale inventory rate was 1.40%, a decrease of 3.79% from June.
States with the highest percentages of delinquencies in July included Mississippi, New Jersey, Louisiana, Maine and New York.
States with the lowest percentages of non-current loans included South Dakota, Montana, Minnesota, Colorado and North Dakota.
States with the highest percentages of seriously delinquent (90 days or more past due) loans included Mississippi, Louisiana, Rhode Island, Alabama and Arizona.
The report compares first- and second-lien debt against May property values to arrive at the finding that total home equity in the U.S. has increased by nearly $1 trillion in the past year to reach the highest level since 2007.
Due to rising property values, Americans had a total of about $7.6 trillion in equity in their homes as of July – an increase of $825 billion compared with July 2014.
About $4.5 trillion of that equity is ‘tappable’ by borrowers, Black Knight says. The average borrower has approximately $19,000 more equity available than one year ago, thanks partly to rising home prices.
‘We've seen total home equity in the mortgage market expand by $825 billion in just the first five months of this year,’ says Ben Graboske, senior vice president of data and analytics for Black Knight, in a statement. ‘At $7.6 trillion, total net equity is nearly 2.5 times more than it was at the end of 2011 and is at the highest level it's been since the start of the housing crisis.
‘To put this growth in perspective, consider that the average American homeowner with a mortgage has about $19,000 more equity in his or her home today than a year ago,’ Graboske says. ‘When we look at the amount of equity available on each home with a mortgage – using an upper limit of 80 percent total combined loan-to-value (CLTV), including first and second liens – we see that 59 percent of total net equity could be accessed by borrowers before hitting that limit. In total, we're looking at over 37 million borrowers with CLTVs below 80 percent that have 'tappable' equity available in their homes.
‘That runs from an average of about $42,000 in equity for those whose homes are in the bottom 20 percent of property values all the way to $267,000 for those in the top 20 percent, with a nationwide average of $120,000,’ he adds. ‘And while originations on second-lien home equity lines of credit (HELOCs) are increasing – they're up 40 percent year over year – they're still far below the levels seen in 2007; 85 percent lower, in fact.’
Of the $4.5 trillion in tappable equity available, $1.7 trillion, or 39%, lies in California alone, according to the report. That's more than six times the amount of tappable equity in Florida. Los Angeles by itself accounts for 14% of the nation's total available equity, according to the report.
However, though the nation's equity situation has improved, Black Knight also cautions against the growing complacency among many industry observers that the risk posed by existing second-lien HELOCs has passed.