Posts Tagged ‘HELOC’

Housing Affordability May Plummet in 2018

Posted on November 21, 2017 by Laura Lam

During the recent CoreLogic and the Urban Institute’s Housing Finance, Affordability and Supply in the Digital Age conference, CoreLogic Chief Economist Frank Nothaft predicted rising interest rates will cause home prices to rise.  Mortgage interest rates are expected to continue rising over the next couple years as experts predict the Federal Reserve will raise the Federal Funds rate in once more this year in December and up to 4 more times in 2018. As the chart shows, CoreLogic forecasted it will rise to 4.7% by December 2018. Nothaft explained as mortgage interest rates increase throughout 2018, less current homeowners will be motivated…

Are Home Equity Loans Staged for a Comeback?

Posted on November 15, 2017 by Laura Lam

There has been a hint of optimism for home equity lending among bankers this earnings season, but attitudes remain mixed a decade after the housing market crash began.  While home equity lines of credit provided a lift to some bank consumer portfolios, a number of other banks said their home equity businesses had fallen and added little about their future. Industry observers say bankers should take the long view. Home equity lines of credit especially are poised to grow now that home values have been rising for a number of years during the economic recovery.  “If you think about the…

Consumer Delinquencies Improve in 2Q

Posted on October 16, 2017 by Laura Lam

Delinquencies in closed-end loans held steady in the second quarter as bank card delinquencies fell and home-related categories continued their return to normal levels, according to results from the American Bankers Association’s Consumer Credit Delinquency Bulletin. Overall, delinquencies fell in 8 of the 11 individual consumer loan categories.  The composite ratio, which tracks delinquencies in 8 closed-end installment loan categories, remained at 1.56% of all accounts – well below the 15-year average of 2.16%. “Delinquencies remain below historical levels as consumers continue to show great command of their finances,” said James Chessen, ABA’s chief economist. “The outlook remains very positive,…

14 Million Homeowners Now “Equity Rich”

Posted on August 23, 2017 by Laura Lam

Home equity is growing as home prices rise across the U.S., and the number of equity-rich properties increased by 1.6 million from last year, according to the Q2 2017 U.S. Home Equity and Underwater report from ATTOM Data Solutions, a multi-sourced property database.  By the end of the second quarter, ATTOM recorded more than 14 million equity-rich properties, properties where the combined loan amount secured by the property was 50% or less than the estimated market value. This increase is up by nearly 320,000 properties from the previous quarter and up 1.6 million properties from last year to 24.6% of all…

Younger Homeowners Opt for HELOCs

Posted on April 18, 2017 by Laura Lam

As interest rates increase, hovering higher than rates last year, buyers have little incentive to refinance their mortgages.  But as refis drop, a whole new loan type rises to take its place – home equity lines of credit (HELOC). While mortgage rates may be high, so are home prices, creating a wealth of new equity for homeowners. Thus, the increase in HELOCs, according to a recent CNBC article by Diana Olick.  More than any other generation, Millennials are utilizing this cash-out mortgage loan.  According to the article, “The last time interest rates rose as much as they have over the…

Home Equity Loans on the Rise

Posted on April 11, 2017 by Laura Lam

Mortgage lenders, along with borrowers, are starting to welcome home equity lines of credit back into the market after the loan product began to disappear in the wake of the financial crisis.  Given their growing prominence in the market, a new report from the American Bankers Association’s Consumer Credit Delinquency Bulletin provides a current pulse on the health of the product by looking at delinquencies.  The report looked at both closed-end loans and open-end loans, since home equity loans fall into both categories. Bankrate explains that there are two types of home equity loans: term, or closed-end loans, and lines of credit, open-end loans.  A home equity…

Home Equity Demand Picks Up

Posted on February 06, 2017 by Laura Lam

Thanks to a confluence of factors, many banks and credit unions are predicting a surge in originations of both home equity loans and home equity lines of credit in 2017.  Driving the demand, bankers said, is that homeowners finally seem ready to take advantage of the appreciation in home values and pull the trigger on home-improvement projects they have been putting off, said Logan Pichel, the head of consumer lending at Regions Financial. Another contributing factor is that banks are carrying relatively low balances of home equity loans, so they have plenty of room to originate new loans. Though it…

HELOCs Making a Rebound

Posted on September 14, 2016 by Laura Lam

Home equity line of credit originations are in the midst of a comeback, fueled by the rise in home prices, according to a white paper released by Experian.  As of the fourth quarter of 2015, HELOC originations were at $43.03 billion, 111% higher than 5 years earlier, Experian recently reported.  Meanwhile, only 0.49% of consumers with an open HELOC were between 90 and 180 days past due, in line with pre-recession levels. Experian also estimated that roughly $29 billion in HELOC debt originated between 2005 and 2008 has been paid down over the past year, a reflection of the fact…

Mortgage Write-Offs Hit 9-Year Low

Posted on June 16, 2016 by Laura Lam

According to data from the April 2016 Equifax National Consumer Credit Trends Report, the total balance of write-offs year-to-date in March for first mortgages, home equity lines of credit (HELOCs), and home equity loans is $9.5 billion, a 9-year low for Q1 and a year-over-year decrease of 22.7%. Homeowners are in the best financial shape they’ve been in since well before the start of the Great Recession,” said Amy Crews Cutts, Senior Vice President/Chief Economist at Equifax. “Total mortgage debt is down over $1 trillion, owner’s equity is up to $12.5 trillion, nearly double the amount held in 2011, and low inventories of homes for sale…

Consumer Delinquencies Fall Below Historic Levels

Posted on April 11, 2016 by Laura Lam

Rising home values continue to provide consumers with a strong incentive to keep up with their home equity loan payments.  According to the American Bankers Association’s quarterly report on consumer delinquency trends, late payments on home equity loans and home equity lines of credit have dipped below 15-year averages for the first time since the Great Recession. In the fourth quarter of 2015, the 30-day delinquency rate on home equity loans fell 23 basis points, to 2.68%, from three months earlier, and home equity line delinquencies fell 13 basis points, to 1.18%, the survey found. However, property improvement loan delinquencies…