Homeowner equity climbed to record highs in the first half of this year, though its rate of growth is slowing as the housing market cools.
Average homeowner equity per borrower reached $298,380 in the second quarter, according to data from CoreLogic.That works out to $3.6 trillion in equity gained by U.S. homeowners with a mortgage, which represent about 63% of all homes, the real estate information company said.
Home price growth is likely to continue to slow. CoreLogic forecasts that home prices will increase by 5% over the next year. Rising homeowner equity creates a buffer for borrowers against potential financial hardship, such as job loss. And it can give homeowners financial flexibility to borrow against their equity to finance large purchases, such as home improvement projects, or pay off high-interest debt — a powerful tool as interest rates climb on revolving debt like credit cards.
In the second quarter, 1.3 million homes, or 2.3% of all U.S. homes with a mortgage, were in negative equity, CoreLogic said. That’s down 18% from the same quarter last year.
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