With home equity levels at record highs, seeing a HELOC boom is no surprise. Tappable equity is available for homeowners to borrow while maintaining at least a 20% equity cushion. And that stood at about $11.75 trillion across America at the start of June, with the average homeowner sitting on $212,000 in accessible funds.
That may be part of the reason for the rise in homeowners taking home equity lines of credit, aka HELOCs. Home equity borrowing reached nearly $25 billion in the first quarter of this year — up 22% compared to the same quarter last year.
It was the largest quarterly volume seen since 2008.
HELOC Rates Fall
The record volume could be partly attributed to falling HELOC rates:
- Lenders are competing aggressively for business, keeping rates relatively low. "The average introductory rate on second lien HELOCs has declined by 2.5 percentage points in recent quarters, dropping below 7.5% in March," says the study.
- The study noted that HELOC rates are falling to near 30-year-fixed mortgage rate levels.
- ICE estimates a $50,000 HELOC would now cost $311 per month, down from $412 per month in early 2024
The data comes from a study from Intercontinental Exchange (ICE) Mortgage Technology division.
More from the ICE report
Other factoids in the report include:
- 48 million mortgage holders have tappable equity.
- On average, mortgaged homes are only 45% leveraged. So, there's an "ample cushion" of equity for most.
- During the first quarter, homeowners accessed only 0.41% of their total tappable equity. So, this HELOC boom potentially has legs.
"In our latest ICE Borrower Insights Survey, roughly 25% of homeowners said they are considering a home equity loan or HELOC in the next year. It’s periods like these — where both demand and affordability trends converge — that represent a critical opportunity ... ” said Tim Bowler, President of ICE Mortgage Technology, in a statement.
Getting a HELOC
If you want to explore your "critical opportunity" and join the HELOC boom, read 7 Ways to Speed Up Your HELOC Approval.
