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An alarming number of new homeowners are discovering they owe more on their mortgage than their home is worth as surging interest rates send housing prices spiraling down. 

About 250,000 Americans who took out a mortgage this year to buy a home are now underwater, meaning the home is worth less than the loan they took out on it, according to new data from Black Knight. Another 1 million have less than 10% equity.  

That’s because the highest mortgage rates in decades, combined with already steep home prices, have made it one of the worst times in a generation for consumers to buy a new house.

“Though the home price correction has slowed, it has still exposed a meaningful pocket of equity risk,” said Ben Graboske, the Black Knight data and analyst president. “Make no mistake: negative equity rates continue to run far below historical averages, but a clear bifurcation of risk has emerged between mortgaged homes purchased relatively recently versus those bought early in or before the pandemic.”