HELOC Balances See Largest Quarterly Increase Since 2005 as Homeowners Avoid Refinancing
Homeowners are increasingly utilizing home equity lines of credit (HELOCs) to access funds, driving balances up by $23 billion in the third quarter. This represents the largest single-quarter jump since 2005 and marks the 18th consecutive quarterly increase, bringing total outstanding HELOC debt to $481 billion. The surge is largely attributed to the 'mortgage rate lock-in effect,' where nearly half of all outstanding mortgages carry interest rates of 4% or lower. To avoid refinancing into current higher mortgage rates—which averaged 7.3% recently—homeowners are opting for variable-rate HELOCs to tap into their substantial housing wealth, which totals $17.5 trillion collectively.
Topics: Federal Reserve Bank of New York HELOC Household Debt Housing Market Mortgage Rates