Homeowners tap HELOCs at record level in first half of 2022: CoreLogic
61% of homeowners said they considered a HELOC or mortgage refinance in the last year, a survey said
Homeowners are sitting on a record amount of equity, but there are fewer refinancing opportunities because of rising interest rates, CoreLogic said. (iStock)
In the first half of this year, home equity line of credit (HELOC) volumes grew to the highest level since the first half of 2007, according to a CoreLogic report.
Lenders originated more than 807,000 new HELOCs in the first two quarters of 2022, which reached almost $131 billion. Rapidly appreciating home prices and a changing interest rate environment were behind the increased activity.
Borrowers are sitting on a record amount of equity, but high interest rates have led to fewer opportunities to refinance, CoreLogic said.
"Home equity grew significantly over the last couple of years, and owners with substantial equity may prefer to keep their existing low rates, thus choosing HELOCs over cash-out refinances," CoreLogic said.
A HELOC is one way that borrowers can access a lump sum of money all at once when the home's value is higher than the mortgage debt. If you want to take advantage of your increased home value, you can consider taking out a HELOC.
Credible doesn't offer HELOCs, but you can compare mortgage refinance rates for a cash-out refinance in minutes without affecting your credit score.
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CoreLogic's latest Homeowner Equity Insights report showed that homeowners with mortgages saw their equity increase by 27.8% year over year in the second quarter of 2022. That translated into a collective gain of $3.6 trillion, for an average of $60,200 per borrower.
Housing markets with the most significant price increases were among those with the biggest year-over-year gains in HELOC activity, according to the report.
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Homeowners' still eager to tap into their home equity' despite higher rates
More than half of homeowners (61%) said they considered a HELOC or mortgage refinance in the last year, according to a Fall 2022 survey from Point, a home equity investment platform. But 35% of those respondents decided not to pursue the loan due to rising interest rates.
The survey said that homeowners taking out $50,000 in equity from their homes would use the cash in the following ways:
- 39% planned to use it for home improvement projects
- 31% planned to pay off existing debt
- 10% planned to invest it
- 6% planned to use it to start a business
"With interest rates in the news so much — and with the true cost of a loan increasing significantly in the last six months — it's telling that so many homeowners are still eager to tap into their home equity or feel as if they have no other good choices," Eddie Lim, CEO and co-founder of Point, said.
If you are interested in pulling cash out of your home, you could also consider taking out a cash-out refinance. Visit Credible to compare multiple mortgage refinance lenders without affecting your credit score.
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