Rising home prices are making borrowers comfortable again with the idea of tapping their homes for cash.
Home-equity line originations rose 8% to nearly $46 billion in the second quarter, their highest level since 2008, according to credit reporting firm Equifax. Borrowing via cash-out mortgage refinances hit $15 billion, up 6% from a year earlier, according to data from Freddie Mac.
The main engine driving demand: rising home prices. The median sales price of an existing home rose to $263,800 in June, the highest on record, up 40% from $187,900 at the start of 2014, according to the National Association of Realtors.
Banks insist the increased borrowing doesn’t herald a return to housing-bubble days when consumers came to view their homes as cash registers. Banks say they are being more cautious in how they make such loans and some add they are encouraging borrowers to tackle renovations or consolidate debt – uses that are considered investments rather than luxuries.
Source: Christina Rexrode, Wall Street Journal, August 28, 2017.
https://www.wsj.com/articles/tapping-your-home-equity-for-cash-is-big-again-1503838802.