HELOC Rate Almost Double From HEL Balance Growth

Mortgage News February 15, 2023

As a result of the steady growth in the cumulative home-equity loan balances over the past year, the annual rate of equity loan balance growth was nearly twice as high as the annual rate of the home-equity line of credit growth. There was a positive change from quarter to quarter in the average amount of available equity.

During the third-quarter 2022, TransUnion reported 317,600 balance-driven Home Equity Lines of Credit (HELOC) were opened, which is a significant increase from the 210,200 lines that were opened during the same period in 2021.

HELOCs are financial products that act as additional mortgages on homes. A revolving line of credit is provided by the lender, much like the way a credit card works. Unlike a credit card, which is an unsecured loan, a HELOC uses collateral such as a house.

According to Chicago-based insights and information company, Home Equity Loan (HELOAN) balances have jumped 16.9 percent from year end 2021 to year end 2022.

However, the growth in HELOC balances year-over-year was just 8.9 percent during the fourth quarter — though it is a marked improvement from the 11.2 percent decline in the fourth quarter of 2021. In addition, it marked the first increase in the fourth quarter for well over ten years.

The median equity increased from $236,000 in the second quarter to $244,000 during the third quarter, which is reported at a one-month lag.

The end of 2022 saw the ninety-day delinquency on HELOANs finished at 0.83 percent, unchanged from the third quarter. The serious consumer-level delinquency rate on HELOCs also remained unchanged at 0.24 percent.

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