Homeowners hold a record $17.5T in home equity, and most of it is leaving through cash-out refis

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1. Homeowners hold a record $17.5T in home equity, and most of it is leaving through cash-out refis

Mortgage holders had a record $17.5 trillion in home equity in Q3, according to ICE. That works out to an average of $204,000 per borrower that they can tap while keeping 20% equity in the home, up $16,600 from a year ago.

With rates above 7%, regular refis have mostly dried up. Cash-out refis are now about one in seven rate locks. These borrowers give up a low rate and take a higher payment to get cash.

That is a problem for servicers. Most borrowers who cash out go to a different lender, so servicers kept only 27% of borrowers who refinanced, down four points from the prior quarter. Cash-out refis made up 75% of servicing runoff from refinances.

2. Massachusetts sets new disclosure rules for shared appreciation mortgages

The Massachusetts Attorney General’s rule, effective Nov. 6, adds disclosure requirements for shared appreciation mortgages (SAMs).

• A SAM pairs a fixed-rate first mortgage with a second lien that makes the borrower share part of any gain in home value when they sell, transfer or refinance. Lenders must now prominently disclose the maximum amount a borrower may have to repay.

The rule also spells out when nonprofit SAM lenders are shielded from state consumer protection claims. That shield came from a 2024 law covering loans like those from BlueHub Capital, which is already facing a class action, Humes v. BlueHub, alleging the loans carry hidden subprime-level costs.

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3. More Nuggets

📰 Longbridge promotes Melissa Macerato to president and chief commercial officer. (BusinessWire)

🏦 Wall Street CEOs told to ‘Preserve Their Documents’ as Warren prepares oversight blitz. (Common Dreams)

🏡 NRMLA asks Congress to restore HUD housing counseling funds. (NRMLA)

4. Monthly mortgage payments are up 13% from a year ago while home prices are flat

The typical monthly mortgage payment rose 12.8% year over year in October, even as home values rose just 0.7%, according to Zillow.

Rates averaged 7.33% in October, up from 6.86% in September, pushing the typical principal-and-interest payment to $2,004, the biggest monthly jump in four years.

Buyers are pulling back. Newly pending listings fell 16.8% from a year ago, the steepest annual drop since August 2023 and the slowest October since 2018. Zillow’s chief economist expects November sales to fall further before the slowdown eases in early 2027.

Buyers have more leverage, with about 1.4 million homes for sale, up 3.4% from a year ago. But a lower price does not offset a higher payment. Zillow estimates payments for FHA buyers putting 5% down are up 11.8% from a year ago.

☀️ You’re all caught up. See you on Wednesday!

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