Black Knight Inc BKI

• In July 2023, the average monthly principal and interest (P&I) payment for borrowers purchasing a home using a 30-year fixed-rate loan was $2,306 – before taxes and insurance are even included
  
  
• That's the highest average P&I payment on record and has risen by 60% (+$871) over the past two years; it's also poised to push even higher given recent rate increases
  
  
• More than half of such July purchase originations had a payment of more than $2,000 a month, up from just 18% 2 years ago, with nearly a quarter (23%) having payments of more than $3,000 – up from 5% in 2021
  
  
• Beyond purchase affordability, rising interest rates are also having a clear and decisive impact on how much equity mortgage holders are willing to withdraw from their homes, and by what means
  
  
• Mortgage holders tapped $39B in equity in Q2 2023 via cash-out refis as well as home equity loans and lines of credit, up modestly from the first quarter but just half the volume of Q1 2022 ($79B) before rates began to rise
  
  
• From 2010-2021, mortgage holders withdrew an average 0.92% of available tappable equity each quarter; that share has fallen to just 0.4% over the past three quarters, resulting in a roughly 55% decline in equity withdrawals
  
  
• Put simply, since rates began their climb roughly 15 months ago, nearly $200B in equity that might have otherwise been withdrawn and injected into the broader economy has remained untapped

JACKSONVILLE, Fla., Sept. 6, 2023 /PRNewswire/ -- Today, Black Knight, Inc., now part of Intercontinental Exchange, Inc. (NYSE: ICE), released its September 2023 Mortgage Monitor Report, based on the company's industry-leading mortgage, real estate and public records data sets. Among other topics, this month's report examines the phenomenon of $2,000-$3,000 monthly mortgage payments, which have rapidly become the norm in today's housing market in the face of spiking interest rates and historically high home prices. As Black Knight Vice President of Enterprise Research Andy Walden explains, this is a remarkably recent development.

"The average principal and interest payment among borrowers purchasing a home using a 30-year fixed-rate loan hit its highest point ever in July at $2,306, and that's before taxes and insurance are factored in." said Walden. "That's up 60% over the past two years, which got us to thinking: just when did the $2,000 monthly mortgage payment become the norm? Just two years ago, only 18% of homebuyers were facing that level of payment; as of the end of July that share had grown to 51%. Beyond that, nearly one in four July homebuyers has payments north of $3,000, up from just 5% in 2021. We've been talking about affordability for quite some time now, but this puts the situation in stark relief.

"Rates aren't just hampering prospective homebuyers, though. While tappable equity levels have returned to near- record highs, rising rates are having a clear impact on how – and how much – equity mortgage holders are willing to withdraw from their homes. All in – including first-lien cash-out refis and second-lien home equity loans and lines – we saw mortgage holders withdraw $39B in equity from their homes in Q2 2023. That's up slightly from Q1's $37B, but only about half the volume of Q1 2022, before interest rates began to climb. Historically, from 2010-2021, mortgage holders pulled out just under 1% of available equity each quarter. But over the last three quarters, that share has fallen to 0.4%, which suggests rising rates have resulted in a roughly 55% decline in equity withdrawals. In essence, over the last 15 months, there's been nearly $200B less equity withdrawn – and reinjected into the broader economy – than might otherwise have been, due in large part to elevated interest rates."

Data on home equity lines of credit (HELOCs) suggests further headwinds. Pegged to the prime rate, which rose later in the cycle than first-lien rates, HELOCs were the beneficiaries of Q2/Q3 2022 30-year rate movements, with borrowers at times able to get lower rates on HELOCs than a cash-out refinance – a historically rare occurrence. In the time since, HELOC rates have risen along with aggressive Fed rate hikes, with the average HELOC offering now above 8.5% for the first time in the 15+ years Black Knight has been tracking the data. Such HELOC rate increases have left borrowers without an overly attractive option to tap into their equity and have led to weaker withdrawal volumes this spring and summer, with second-lien withdrawals down by a little over 30% from the same time last year. However, HELOCs still remain the more attractive of the two options for homeowners needing to access equity without sacrificing record-low first-lien rates.

Much more information on these and other topics can be found in this month's Mortgage Monitor.

About the Mortgage Monitor
The Data & Analytics division of Black Knight manages the nation's leading repository of loan-level residential mortgage data and performance information covering the majority of the overall market, including tens of millions of loans across the spectrum of credit products and more than 160 million historical records. The combined insight of the Black Knight HPI and Collateral Analytics' home price and real estate data provides one of the most complete, accurate and timely measures of home prices available, covering 95% of U.S. residential properties down to the ZIP-code level. In addition, the company maintains one of the most robust public property records databases available, covering 99.9% of the U.S. population and households from more than 3,100 counties.

Black Knight's research experts carefully analyze this data to produce a summary supplemented by dozens of charts and graphs that reflect trend and point-in-time observations for the monthly Mortgage Monitor Report. To review the full report, visit: https://www.blackknightinc.com/data-reports/

About Intercontinental Exchange

Intercontinental Exchange, Inc. (NYSE: ICE) is a Fortune 500 company that designs, builds and operates digital networks to connect people to opportunity. We provide financial technology and data services across major asset classes that offer our customers access to mission-critical workflow tools that increase transparency and operational efficiencies. We operate exchanges, including the New York Stock Exchange, and clearing houses that help people invest, raise capital and manage risk across multiple asset classes. Our comprehensive fixed income data services and execution capabilities provide information, analytics and platforms that help our customers capitalize on opportunities and operate more efficiently. At ICE Mortgage Technology, we are transforming and digitizing the U.S. residential mortgage process, from consumer engagement through loan registration. Together, we transform, streamline and automate industries to connect our customers to opportunity.

Trademarks of ICE and/or its affiliates include Intercontinental Exchange, ICE, ICE block design, NYSE and New York Stock Exchange. Information regarding additional trademarks and intellectual property rights of Intercontinental Exchange, Inc. and/or its affiliates is located here. Key Information Documents for certain products covered by the EU Packaged Retail and Insurance-based Investment Products Regulation can be accessed on the relevant exchange website under the heading "Key Information Documents (KIDS)."

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SOURCE Black Knight, Inc.