RealtyTrac: HELOC Originations Up More Than 20%, Year Over Year

A total of 797,865 home equity lines of credit (HELOCs) were originated nationwide from June 2013 to June of this year – an increase of 20.6% and the highest level since the 12 months ending in June 2009, according to a new report from RealtyTrac.

The report also shows HELOC originations accounted for 15.4% of all loan originations nationwide during the first eight months of 2014, the highest percentage since 2008.

Still, U.S. HELOC originations were 76% below 2005-2006 peaks.

In a release, Daren Blomquist, chief analyst for RealtyTrac, says the recent rise in HELOCs shows that Americans are ‘gaining confidence in the strength of the housing recovery.’ What's more, it ‘reflects a natural evolution for a lending industry looking for products they can offer to homeowners who have already refinanced their first position loan into a low fixed rate,’ he says.

‘A HELOC enables homeowners to leverage additional equity they may have gained since refinancing, while still preserving the rock-bottom interest rate on their first position loan,’ Blomquist says, adding that nearly 10 million homeowners nationwide, or about 19% of all homeowners with a mortgage, now have at least 50% equity in their homes.

Helping to spur HELOC originations is the fact that home prices keep rising, which, in turn, reduces the number of homeowners who are underwater. The percentage of homeowners with severe negative equity has decreased from 29% in the second quarter of 2012 to 17% in the second quarter of this year, according to RealtyTrac.

Cities that saw the biggest year-over-year increases in HELOC originations, as of the second quarter, were Riverside-San Bernardino in Southern California (87.7%); Las Vegas (85.1%); Cincinnati (81.0%); Sacramento, Calif. (65.1%); and Phoenix (60.1%).

Cities that saw the smallest increases in HELOC originations from a year ago were Minneapolis-St. Paul, Minn. (0.2%); Louisville, Ky. (3.3%); Philadelphia (3.6%); Virginia Beach, Va. (4.3%); and St. Louis (5.6%).

To read the full report, click here.


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