Home equity continues its monster surge and will continue to do so, according to analysts. Rising home prices have now pushed the national home equity to new highs.

Home equity is the amount of money any mortgage holder can pull out of the home while still holding 20% equity in the home. This number rose to $1.2 Trillion in Q1 and is recorded as the largest single quarter gain since Black Knight analysts began tracking the figure in 2005.

Individuals or families with a mortgage played part in the home equity being up 34% in April. This is two times the number it was in 2006 when the figure also recorded a high.

Tappable equity is held by high-credit borrowers with low mortgage rates. Three-quarters of the borrowers have rates below 4% and the current rate on a 30-year fixed mortgage is over 5%. Rising home values and rising mortgage rates show home buyers are being priced out. Some individuals can’t afford a home.

“It really is a bifurcated landscape – one that grows ever more challenging for those looking to purchase a home but is simultaneously a boon for those who already own and have seen their housing wealth rise substantially over the last couple of years. Depending upon where you stand, this could be the best or worst of all possible markets.”

Ben Graboske, president of Black Knight Data & Analytics, said.

The good news, however, is the housing market is giving many indications of slowing down. YOY, housing prices have slipped from 20.4% to 19.9%. Rising rates could turn out beneficial to potential home buyers at some point.

“April’s decline is more likely a sign of deceleration caused by the modest rate increases in late 2021 and early 2022 when rates first began ticking upwards. The March and April 2022 rate spikes will take time to show up in repeat sales indexes.”

Ben Grabokse added.

Historically speaking, when interest rates go up, housing purchases cool down, thus home prices also become “discounted” from previous highs. In this case, supply remains at a ridiculous low and active listings are 67% below pre-pandemic levels. 820,000 fewer listings have been recorded compared to a typical spring season.

Homeowners are also less likely to sell their homes with some turning to tap some of the equity for renovations. The preferred line of credit comes from home equity lines as owners don’t want to refinance at a higher rate.

Home improvement spending is expected to jump almost 14% this year, according to Harvard’s Joint Center for Housing.

“Record-breaking home price appreciation, solid home sales, and high incomes are all contributing to stronger remodeling activity in our nation’s major metros, especially in the South and West.”

Sophia Wedeen, a researcher in the Remodeling Futures Program at the Center, said.