Owners are sitting on a record amount of equity, but there are fewer opportunities to refinance due to rising interest rates, CoreLogic said. (iStock)
In the first half of this year, home equity line of credit (HELOC) volumes reached their highest level since the first half of 2007, according to a CoreLogic Report.
Lenders created more than 807,000 new HELOCs in the first two quarters of 2022, which reached nearly $131 billion. The rapid appreciation of real estate prices and the evolution of interest rates were behind the increase in activity.
Borrowers are sitting on a record amount of equity, but high interest rates led to fewer refinancing opportunities, CoreLogic said.
“Housing equity has increased significantly over the past two years, and homeowners with substantial equity may prefer to keep their existing low rates, thus choosing HELOCs over cash refinances,” CoreLogic said.
A HELOC is a way borrowers can access a lump sum of money all at once when the value of the home is greater than the mortgage debt. If you want to take advantage of your home’s increased value, you can also consider tapping into your home’s equity with a cash refinance. Visit Credible to find your personalized interest rate in minutes without affecting your credit score.
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Rising mortgage rates and reduced buyer appetite have slowed the housing market and cooled house prices. Still, U.S. home prices remain well above their levels of a year ago, according to Craig Lazzara, managing director of S&P Dow Jones Indices.
The latest from CoreLogic Owners Equity Report showed that homeowners with mortgages saw their net worth increase by 27.8% year over year in the second quarter of 2022. This translated into a collective gain of $3.6 trillion, for an average of $60,200 per borrower.
According to the report, the housing markets with the largest price increases were among those that saw the largest year-over-year gains in HELOC activity.
If you want to take equity out of your home, you can consider cash refinancing to help pay off debt or finance home renovations. Visit Credible to compare multiple mortgage lenders at once and choose the one with the best interest rate for you.
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Homeowners are still keen to dip into their home’s equity despite higher rates
More than half of homeowners (61%) said they had considered a HELOC or mortgage refinance in the past year, according to a Point Fall 2022 Survey, a home equity investment platform. But 35% of those respondents decided not to pursue the loan because of rising interest rates.
The survey found that homeowners who take $50,000 of equity from their home would use the money in the following ways:
- 39% planned to use it for home improvement projects
- 31% planned to pay off their existing debt
- 10% planned to invest it
- 6% planned to use it to start a business
“With interest rates making so much of the news – and with the true cost of a loan rising dramatically over the past six months – it’s telling that so many homeowners are still keen to dip into equity. from their home or feel like they have no other choice,” said Eddie Lim, CEO and co-founder of Point.
If you want to tap into the equity in your home, you can consider cash refinancing. Visit Credible to find your personalized interest rate without affecting your credit score.
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