Home equity has spiked to a new record approaching $15 trillion as home prices rose from 2011 until now, yet outstanding home equity line of credit balances have been declining since 2009, and are now at $422 billion, the lowest level in 14 years
Equity is the part of your home’s value that isn’t financed. So if your home is worth $500,000 and you owe $300,000, you have $200,000 in equity.
And as many as 70 million of you have tappable equity, but aren’t tapping it. The latest (albeit small sample size) data out this week said more people will use personal loans to finance home improvements than home equity.
Counterintuitive for three reasons: (1) home equity loans have lower rates than personal loans, (2) if you’re improving your home, it usually implies you’re staying longer, and (3) interest a home equity loan is tax deductible when used for home improvements whereas interest on a personal loan is not.
So why aren’t people tapping into their home richness?
Is it because we all have such strong memories of homes as ATM machines pre-crisis?
Or is it because home equity loans are too hard to get?
This Thursday, The Basis Point founder Julian Hebron and data giant Black Knight, Inc. director of research Andy Walden will dive into the home equity logjam in a webinar hosted by the Consumer Bankers Association and Blend.
To get you prepped for the webinar, here are some key stats on the state of home equity.
And we hope you will please join us as we figure out the best path to tapping equity responsibly by signing up for the webinar here.