HELOCs and Home Equity Loans: Both are Growing Fast

Americans put off their home purchasing plans due to high interest rates and high home prices.

The annual growth rate of homeowner equity continued to increase, up by 18% year-over-year in the third quarter of 2022, reaching an all-time high of $20 trillion.

That represented an increase of $600 billion from the second quarter.

Home equity line of credit was up 41% year-over-year in the third quarter of 2022.

Home equity loan originations grew 47% year-over-year in 2022, representing the most home equity loan originations on record since 2010.

“The main reasons why homeowners utilize the equity available to them is to consolidate debt, home improvement and big ticket purchases,”

says Joe Mellman, senior vice president and mortgage business leader.

Mortgage originations continued their slowdown in the face of higher interest rates.

Third quarter of 2022, showing a 56% decrease year-over-year in overall originations, down to 1.5 million from 3.4 million in the third quarter of 2021.

Homeowners don’t want to leave a 3% interest rate for nearly double the rates.

Homeowners use their equity to put money back into home renovations or consolidating other high interest rate debt.