FHFA: Homeowners’ equity remains high

Homeowner equity in the U.S. remains high and the percentage of homeowners with negative equity is at its lowest level in a decade, according to a new analysis by the Federal Housing Finance Agency. Citing the most recent data from the National Mortgage Database, agency staff noted that around 97% of outstanding first-lien, closed-end residential mortgages in the U.S., and 98.5% of those acquired by Fannie Mae and Freddie Mac, have home equity above 10%.

At the same time, the percentage of mortgages with equity of more than or equal to 30% has increased steadily from 46.1% in first quarter in 2013 to a 10-year high of 83.3% by Q1 2023, according to the analysis. However, the percentage of high-equity mortgages has been relatively constant over the past year.

Most homeowners who purchased or refinanced their properties prior to Q2 2022 have seen large home price appreciation, and consequently, large increases in home equity, causing only 0.2% of mortgages to have negative equity, the lowest value since 2013, according to FHFA. While house price appreciation has helped increase home equity, if house prices were to decline 10%, homeowners with current equity of 10% or less would go “underwater” or have negative equity, owing their lender more than the property’s worth, it added.