REALTOR REPORT -- 4/3/2017
HOMEOWNERS GAINED A COLLECTIVE $570 BILLION IN 2016:
Over 39.5 million homeowners now have over half-a-trillion dollars in home equity that they can access and have at least 20% equity in their property.
Rising home values are a big reason for the increase in equity and as it turns out, the number one reason homeowners are tapping into their home's equity is for home improvement/remodeling which will, in turn, cause a further increase in their home's value.
But access to that equity has switched from the simple cash-out refinance (that often accompanied getting rid of private mortgage insurance at the same time) to a Home Equity Line of Credit (HELOC) which is a form of a second lien mortgage.
"The last time interest rates rose as much as they have over the past few months, we saw cash-out refinances declined by 50 percent," said Ben Graboske, executive vice president at Black Knight. He expects to see more HELOCs instead.
And more millennials are using HELOCs than Gen-Xers or baby boomers, according to a survey by TD Bank. In fact, more than a third of millennials said they are considering applying for an HELOC in the next 18 months, which is more than twice the rate as Gen-Xers and nine times that of baby boomers.
"We were a little surprised about that," admitted Mike Kinane, general manager of home equity products at TD Bank. "I think millennials are taking a more conservative approach, but they recognize that HELOCs have a good purpose, especially for remodeling."