A surge in home equity borrowing may be around the corner as household equity levels surpassed their previous housing bubble peak, according to a TransUnion study.
Household home equity is nearing $15 trillion, an increase of more than $1 trillion from the prior high achieved during the run-up to the crisis in the first quarter of 2006. Home equity levels hung around $6 trillion between 2009 and 2011 and have since grown rapidly, even outpacing home price appreciation.
As households continue seeing home equity growth, rising interest rates and property values create more of an incentive for
And because around 70 million homeowners likely qualify for a home equity product, lenders can leverage evolving market conditions as an opportunity to educate borrowers on their options.
"There are ample signs that the home equity lending market is poised for growth. Home prices have surpassed 2005 boom levels and household home equity has grown even faster. Increasing consumer debt makes debt consolidation an appealing option and home equity can be the most economically attractive path to do just that," Joe Mellman, senior vice president and mortgage business leader at TransUnion, said in a press release.
"The recession caused a home equity lending pull-back, which all but eliminated consumer marketing and education. We think there's an opportunity to re-introduce that education to consumers and help them evaluate how and when tapping home equity could make sense," he continued.
With 1.2 million originations, home equity lines of credit were the most tapped home equity product last year, a growth of 2.3% from 2016.
