the party is over — all those poor millennials who bought overpriced homes https://t.co/PdiQ4GkuFX
— Alastair (@StockBoardAsset) October 19, 2018
https://twitter.com/atlewillems/status/1053032198620766209
via CNBC:
- The amount of home equity that consumers are sitting on has been rising steadily since it hovered at around $6 trillion from 2009 through 2011.
- Homeowners who are considering turning to a home equity loan or line of credit should make sure they understand how these financial instruments work before signing on the dotted line.
With untapped home equity at an all-time high of $14.4 trillion, homeowners could be poised to start cashing in, new research suggests.
Home equity — the difference between a property’s value and the amount owed on it — is about $1 trillion higher than its peak in 2005 before the Great Recession, according to a TransUnion study released this week. By 2009, the level had dropped to about $6 trillion as the housing market struggled to recover.
“Consumers have been building up that equity over the last seven years or so,” said Joe Mellman, senior vice president and mortgage business leader at TransUnion. “It has really come roaring back.”
With interest rates rising on consumer debt, home equity loans or lines of credit could be an appealing option for consumers looking to borrow money at a lower cost, Mellman said.
“When rates were low, consumers were taking out equity by refinancing their mortgage,” Mellman said. “Now, with [mortgage] interest rates up, a lot of people might not want to touch their original mortgage.”
In other words, if refinancing would mean paying a higher interest rate on your primary mortgage, it might not be a wise move.
The average rate on a 30-year traditional mortgage is now 5.01 percent, according to Bankrate. The average interest rate on a home equity loan is around 6 percent.