Equity Is Up – But Fewer Homeowners Tap Into It

In the Great Recession, many homeowners tapped into rapidly rising equity, but they’re more cautious today, with HELOC applications dropping 5.5% in 4Q 2021.

WASHINGTON – Despite increasing equity, fewer homeowners are taking out home equity lines of credit (HELOCs). A March 18 report from ATTOM Data Solutions shows the number of HELOCs issued in the fourth quarter of 2021 was down 5.5% from the previous quarter – and down 4.2% below the level issued in the fourth quarter of 2020.

HELOC mortgage originations fell from the third quarter to the fourth quarter of 2021 in 68% of the metro areas tracked. The largest decreases were in Atlanta (down 36.1%); San Antonio (down 23.3%); Houston (down 19.1%); Austin, Texas (down 18.5%); and St. Louis (down 15.9%).

But homeowners in some locales seem more apt to take advantage of their growing equity.

The largest quarterly increases in HELOCs among metro areas with at least a population of 1 million in the fourth quarter 2021 were in: Cleveland (up 32.7%); Buffalo, N.Y. (up 24.3%); Raleigh, N.C. (up 21.7%); Philadelphia (up 13.5%); and Detroit (up 10.6%).

A separate study from LendingTree analyzed the top reasons homeowners reach for their equity: 50% seeking a HELOC across 50 metros cited home improvements as the primary reason, while 24% wanted to consolidate their debt.

Source: “Top 10 U.S. Metros Where HELOC Lending Is on the Rise,” ATTOM Data Solutions (March 18, 2022)

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