HELOC Lending Rebounds as Consumer Confidence, Equity Expand

Home equity lines of credit or HELOCsrnaccounted for over 15 percent of all 2014 home loan originations through thernend of August.  RealtyTrac, whichrnreleased its first U.S. Home Equity Linernof Credit Trends Report on Thursday said that this is the highest marketrnshare for these loans since 2008.  </p

Lending for these loans increasedrnnationwide by 20.8 percent for the 12 months ended in June 2014 compared to thern12 months that ended in June 2013. Despiternthe increase, HELOC originations in most areas were well below their peaks fromrnthe previous housing boom. Nationwide, the 797,865 HELOC originations in the 12rnmonths ending in June 2014 were 76 percent below the previous peak of 3,299,007rnin the 12 months ending June 2006. The 15.4 percent share of HELOCsrnyear-to-date nationwide was also below the 24.7 percent share in 2005</p

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 “This recent rise in HELOC originationsrnindicates that an increasing number of homeowners are gaining confidence in thernstrength of the housing recovery and, more importantly, have regained much ofrntheir home equity lost during the housing crisis,” said Daren Blomquist.rn”Nearly 10 million homeowners nationwide, representing 19 percent of allrnhomeowners with a mortgage, now have at least 50 percent equity in their homes,rnaccording to RealtyTrac data. Meanwhile the percentage of homeowners withrnsevere negative equity has decreased from 29 percent in the second quarter ofrn2012 to 17 percent in the second quarter of this year.</p

“The rise in HELOCs also reflects arnnatural evolution for a lending industry looking for products they can offer tornhomeowners who have already refinanced their first position loan into a lowrnfixed rate,” Blomquist added. “A HELOC enables homeowners to leveragernadditional equity they may have gained since refinancing while still preservingrnthe rock-bottom interest rate on their first position loan.” </p

HELOC originations remain belowrntheir peaks in 49 of the 50 major metro areas and in many areas are well belowrnthose peaks.  Even in Los Angeles, where HELOCrnoriginations increased by 55 percent since last year the level of lending is stillrnat only at about 20 percent of its previous peak.  The sole metro area which has exceeded itsrnpre-housing crisis peak is Pittsburgh, where HELOC originations increased 13.9rnpercent year-over-year, bringing the city to a new peak.  HELOC originations represent 24.2 percent ofrnall originations in the city thus far in 2014</p

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