Home equity lines of credit (HELOC) are increasing in the United States, according to Equifax’s National Consumer Trends Report. In 2014, more than $120 billion worth of HELOCs were originated, which is a 21.5 percent year-over-year increase. In addition, more than 1.2 million new HELOCs were opened in 2014, a 15.8 percent increase from the year before. These represent six year highs for HELOC originations.
"Home equity lines of credit, or HELOCs, are attracting more borrowers now that many borrowers once again have sizeable equity in their homes - nationally home values have increased about 26% on average since January 2011," said Amy Crews Cutts, Chief Economist at Equifax. "Many homeowners with a low-rate first mortgage will be reluctant to refinance that mortgage into a higher rate and rules for cash-out refinance are onerous relative to home equity loans. Over the next several years, HELOCs should continue to attract substantial consumer interest as a way to maintain low rates on primary mortgages while also gaining access to accumulated home equity for home improvements, tuition or other important uses."
Mortgage industry write-offs continue to decrease. From February 2014-2015, home equity revolving lines of credit write offs decreased 32.9 percent. First mortgage writes decreased 30.1 percent and home equity installment loans decreased 17.8 percent.
"Employment gains in 2014 were huge as more than three million jobs were added to the U.S. economy,"Cutts said. "With strong improvements in labor markets mortgage delinquencies and write-offs fall. Rising home values are also helping pull more homeowners back into the black on their mortgages and reducing the incentive to default. These trends show no signs of slowing so 2015 should see further improvements in mortgage and home equity loan performance."
Total mortgage balances and accounts outstanding are also decreasing. As of February, the amount of first mortgage accounts decreased 0.8 percent from a year ago, totaling to $8,150. 1 billion and 49. 9 million accounts. The home equity installment loans balanced decreased 16.9 percent to $137.2 billion and accounts decreased 10.9 percent to 4.6 million accounts. The home equity revolving lines of credit balance decreased 3.2 percent to $512.2 billion and accounts decreased 5 percent to 11.4 million compared to a year ago.