HELOCs Make Comeback as Prices Rise
A HELOC rebound is underway, according to a recently released Experian white paper. The rise in home equity lines of credit, commonly referred to as HELOCs, affects consumers and lenders positively, with consumers making payments on time and being responsible with their financial debts. Even with this positive outlook, consumers and lenders still should proceed somewhat cautiously, as $236 billion in HELOC debt originated between 2005 and 2008 is now nearing repayment.
Given that a significant number of these HELOCs are reaching the end of their borrowing period and approaching repayment, Experian is looking at how consumers are managing these payments and what those spikes and trends mean. "During the housing boom, home equity lending was heating up, but lenders pulled back significantly as home prices began to fall," says Michele Raneri, vice president of analytics and new business development. "What we're seeing now is that home values have recovered, but the end of draw is still a factor that needs to be considered when it comes to consumer and lending behavior." The study focuses on the HELOC trends that can affect the lending ecosystem moving forward. Findings include:
"Many consumers have dealt with repayment well, while others may experience payment shock," continues Raneri. "The best path forward in this situation is for consumers to fully understand this potential payment stress, use resources available to them and to work closely with their lender to navigate these changes. If consumers have good credit and equity in their homes, they most likely can refinance their HELOC." Additional insights and information are available in the white paper. |
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