American homeowners have a record amount of wealth in their homes they can tap, but few of them are.
Total home equity in the U.S. rose to its highest level ever at $6.5 trillion in the first quarter before the coronavirus pandemic took hold, according to Black Knight, a loan research and analytics firm, up from $6.2 trillion at the end of 2019.
But the share of cash-out refinances, which unlock that wealth, fell to a four-year low. As of June, there were no indications that cash-out refinances were on the rise, Black Knight found, even as the pandemic continues to financially strain many U.S. households.
Why homeowners aren’t tapping their equity is twofold, experts said. Homeowners are reluctant to drain that wealth, while banks are reticent to lend to riskier borrowers in such uncertain economic times.