2021 sees most cash-out refinances in nearly two decades: Black Knight data

Borrowers pulled out $275 billion in equity

Home equity is rising to record levels, and so are cash-out refinances, according to Black Knight.  (iStock)

Homeowners took out a record $1.2 trillion in cash-out refinances in 2021 — the most since 2005 — and tapped $275 billion in home equity, according to the latest Mortgage Monitor report from Black Knight.

In the fourth quarter alone, borrowers tapped a record $80 billion, marking the largest quarterly volume in 15 years. It was also the fifth consecutive quarter of more than 1 million cash-out refinance loans, according to the report. 

The data showed that homeowners are now withdrawing more of their available equity than they were before COVID-19 in 2018 and 2019. But they’re only withdrawing at half the rate of what they were in 2006. 

If you are interested in tapping into your home equity, you could consider a cash-out refinance. Visit Credible to find your personalized interest rate without affecting your credit score.


Home price growth accelerates in January

The number of cash-out mortgage refinances grew due to several factors including an increase in home values and low mortgage rates. 

Home price growth accelerated for the third consecutive month in January with the average home value rising 19% annually, according to Black Knight. This increase is just below July's record high of 19.5%. 

On a monthly basis, the average home price rose more than 1% in January. And the upward trend was dominant through most of the U.S., with about 75% of major U.S. markets seeing home price growth appreciation. 

Homeowners can take advantage of this growth through a cash-out refinance to possibly lower their monthly mortgage payments and pull cash out of their homes. Visit Credible to compare multiple mortgage lenders at once and choose the one with the best rate for you.


Mortgage rates rising at most rapid pace since 2013

Interest rates have risen sharply over the past few weeks, accelerated by the Federal Reserve’s tapering of its bond-buying program and its decision to increase the federal funds rate. The average 30-year mortgage rate rose by 70 basis points so far this year, according to Black Knight’s Optimal Blue dataset. 

In fact, this rate of increase has not occurred for 30-year rates since the "Taper Tantrum" in 2013, the report said. At the end of February, there were about 3.8 million homeowners that could lower their monthly payment through refinancing, about 65% less than the 11 million who could do the same in December.

"Rising mortgage rates alongside rapidly rising home prices will continue to accelerate the transition from a refinance-centric to purchase-centric lending market as well as a rate-centric to equity-centric refinance market," Black Knight said in its report. 

If you are interested in refinancing your mortgage or taking cash out of your home while mortgage rates remain low, contact Credible to speak to a home loan expert and get all of your questions answered.

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