econintersect.com
       
  

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.



posted on 27 March 2016

Home Equity Loans Make A Comeback

from CoreLogic

-- this post authored by Frank Nothaft

After years of falling volume, home equity lending is making a comeback. For the past two years, origination volumes have been trending sharply higher as more homeowners benefit from home price appreciation and more lenders see opportunity in the loan segment.

During the first nine months of 2015, lenders approved nearly one million new home equity lines of credit with an aggregate credit limit in excess of $115 billion.

Also known as a HELOC, new approvals during 2015 were on pace to be the largest amount since 2008, and more than double the volume just three years ago. Despite this pick-up, the HELOC market in 2015 was still less than one-half the volume in 2006. But there are clear signs that improving home values and better loan performance are converging to increase loan demand and product availability.

Two factors driving the growing consumer interest in HELOCs are the growth in home equity and the desire of homeowners to keep their low-interest-rate first mortgage. Home-value growth is the primary building block for home equity, and the CoreLogic Home Price Index for the U.S. has found an average 36 percent appreciation from its 2011 trough.[1] These value gains have fueled the $6 trillion increase in home equity since mid-2011.[2] Further, there has been a large increase in owners with at least 25 percent equity in their home, meaning that they have sufficient equity built up to prudently tap into a part of it with a home equity loan. Today, more than 60 million homes are either owned 'free and clear' of debt or the owner has at least 25 percent equity (Exhibit 2). That's an increase of more than 10 million homeowners with at least 25 percent equity since the Great Recession.

In the past, homeowners looking to tap the equity in their homes might also have considered a cash-out refinance of their first mortgage. But over the past few years the vast majority of current home owners have already taken out a new mortgage with a very low interest rate. The average rate on residential mortgage debt outstanding was 3.8 percent at the end of 2015.[3] Rather than refinance, homeowners can consider using a HELOC to convert equity into cash for home improvements or other needs.

The recent resurgence in home equity lending may be a driver of remodeling expenditures by homeowners. Remodeling spending has increased 27 percent during the past three years, concurrent with the pickup in home equity lending (Exhibit 3). This spending is equivalent to homeowners making investments in their homes and is part of housing's contribution to economic growth.


1 From its March 2011 trough, the CoreLogic HPI for the U.S. has risen 36 percent through December 2015.

2 Federal Reserve, Z.1 table B.101; December 10, 2015, owner-occupied single-family.

3 The Bureau of Economic Analysis estimated the effective interest rate on residential mortgage debt outstanding was 3.8 percent at the end of 2015.

© 2016 CoreLogic, Inc. All rights reserved.

Source

http://www.corelogic.com/blog/authors/frank-nothaft/2016/03/us-economic-outlook-march-2016.aspx#.Vve_y_krKUk

>>>>> Scroll down to view and make comments <<<<<<

Click here for Historical News Post Listing










Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.




Econintersect Contributors


search_box

Print this page or create a PDF file of this page
Print Friendly and PDF


The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.


Take a look at what is going on inside of Econintersect.com
Main Home
Analysis Blog
Was Marx Right?
Angst in America, Part 5: The Crisis We Can’t Muddle Through
News Blog
Guanxi: How Business Is Done In China
Measuring Interest Rate Risk In The Very Long Term
2016 Small Business Credit Survey: A Significant Majority Relied On Personal Finances
How Economic Changes Affect Congressional Budget Office's Budget Projections
Three Public Relations Blunders And How Your Company Can Learn From Them
Infographic Of The Day: Cheat Sheet: NAFTA's Mixed Track Record Since 1994
Early Headlines: Trump Blames Dems And Constitution For Chaos, US Child Poverty, Winter Leaves North New England, Labour Gains In Polls, And More
Grading President Trump's First 100 Days: B!
The Most Important Gaming Platforms 2017
Earnings And Economic Reports: Week Starting 01 May 2017
Ancestors Of Flores 'Hobbits' May Have Been Pioneers Of First 'Human' Migration Out Of Africa
The Global Top 10 Android Apps
What We Read Today 29 April 2017
Investing Blog
Technical Thoughts: Finding Contrarian Ideas
More People Have Access To Netflix Than A DVR
Opinion Blog
Investors: Super Size Me
How Our Addiction To Safety Could Lead To Another Financial Crisis
Precious Metals Blog
A New Age For Gold
Live Markets
28Apr2017 Market Close: Wall Street Closed Mostly Down On News The U.S. Economy Grew At Its Weakest Pace In Three Years, WTI Crude Settles In The Low 49 Handle
Amazon Books & More






.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government































 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved