As Prices Rise, Home Owners Tap Into Equity
February 11, 2013
As home prices are edging up, home equity lines of credit are on the rise again, CNBC reports. Originations of home equity lines of credit jumped 19 percent at the end of last year, according to Equifax.
JPMorgan Chase says it’s seen a 31 percent increase year-over-year in HELOCs its originated.
"Home prices are definitely a factor" in the recent rise home equity lines of credit, says Brad Blackwell, an executive with Wells Fargo Home Mortgage. "As they increase, people have more available equity." Increased consumer confidence also may be at play, as more home owners feel more confident about being able to one day repay these loans, Blackwell says.
Reportedly, more home owners are spending the extra cash on their homes. "We are seeing more responsible uses today, like home improvements, education expenses, or other major expenses that would be a more responsible use of a customer's home equity," Blackwell told CNBC.
The average home equity line was slightly below $90,000 as of October 2012, according to Equifax. In October 2006—during the housing boom—average lines of credit were just over $100,000.
While home equity lines of credit are up, they’re still a far cry from 2006 numbers, however. In 2012, borrowers took out $7.2 billion in home equity lines of credit through last October, compared to about $28 billion in 2006.
Source: “Americans Are Tapping into Home Equity Again,” CNBC (Feb. 9, 2013)
Updated: November 25, 2020