Homeowners reach for equity credit lines over refinancing as interest rates climb

Interesting slide shows about the world Slideshow World by [ArcaMax](?ezine=782&lctg=D0FtUlX0YdOUrV9rVUEubuoU613BSpv3i_Gtw9CQCJY&r=AJbmpUbFAwqt5pJ5_8hfGkUeALjAlTfD12WjC797L-BDOjMyNzAwODM2NDpKOjIxOTU2MjA6TDo3ODI6Ujo0MDM2NTE6Vjo0Mw) [Homeowners reach for equity credit lines over refinancing as interest rates climb]( Dom DiFurio [ Homeowners reach for equity credit lines over refinancing as interest rates climb ]( [See full slideshow »]( As inflation and rising interest rate concerns moved to the front of Americans' minds, the hot trend of mortgage refinancing cooled and gave way to a growing tendency of homeowners to take out home equity loans. Experian examined origination data from the third quarter (Q3) of 2022 for home equity lines of credit (HELOCs) and refinance loans to see how lending activity has changed since the Federal Reserve began raising interest rates in March 2022. When the COVID-19 pandemic first hit the U.S. in March 2020, the Federal Reserve quickly slashed interest rates in order to lessen the cost of borrowing money. The intended goal was to head off a deep recession by keeping people spending and the economy moving. A historically low federal funds rate of nearly 0% gave lenders room to lower interest rates on loans. That included refinancing loans, which are used when a homeowner replaces their current mortgage with a new mortgage—typically one with more favorable terms. Refinancing a mortgage can be done with the existing or new lender, and typically entails paying one-time fees and closing costs. Nearly 1 in 4 homeowners in the U.S. refinanced their mortgage in 2021, according to a May 2022 report from the Federal Reserve. That's a higher rate than in 2020, which saw 1 in 5 homeowners refinance. Households with at least six-figure incomes were almost twice as likely than those making under $50,000 to have refinanced their mortgage in 2021, according to the Fed. After the Federal Reserve began raising interest rates in March 2022, homebuying activity slowed tremendously, falling for the last 11 months of 2022, according to Zillow. Experian data from Q3 2022—the most recent data available—found that refinancing activity also slowed, falling by 93% nationwide in the first nine months of 2022. At the same time, a jump in home equity value provided a substantial boost to existing homeowners, who saw their property values remain near pandemic peaks in the first half of 2022, giving them substantial equity against which to take out loans. The Federal Reserve estimates housing wealth in the U.S.—measured by home equity value—increased by almost $9 trillion from the start of 2020 through Q3 2022. In many areas of the country, especially in the West, the overheated home prices are starting to cool, and home values in some markets actually fell in Q3 2022. Home prices may drop as much as 15% to 20% in 2023 in the worst-case scenarios projected by the Federal Reserve Bank of Dallas. Visit thestacker.com for similar lists and stories. [Tweet It]( - [Facebook It]( Sponsor More Slideshow World from ArcaMax.com - [Notable weather events from the year you were born]( - [How companies are keeping remote employees engaged and productive]( - [How K-12 public school funding has changed over the past decade]( - [How the US compares to other countries on policies that could mitigate homelessness]( [Click To Unsubscribe]( | [Customer Service]( | [Privacy Policy]( | [California / Nevada Privacy Info]( 1706 Todds Lane, Box 311, Hampton, VA 23666 Copyright © 2023 ArcaMax Publishing [Facebook]( [Twitter](/ArcaMax)