Skip to comments.Americans Are Using Their Houses as ATMs Again
Posted on 02/08/2013 12:05:23 PM PST by ExxonPatrolUs
Nearly 11 million borrowers are underwater on their mortgages, owing more than their homes are worth, according to CoreLogic, and yet home equity lines of credit are suddenly on the rise again.
During the housing boom of the last decade Americans withdrew over $1 trillion in home equity. They did it through cash-out refinances, home equity loans, and home equity lines of credit. The latter allowed them to use their homes like an ATM. They spent the money on cars, televisions, vacations and fancy home upgrades. It was seemingly endless equity, until suddenly that equity was gone.
"Home prices are definitely a factor" in the recent rise home equity lines of credit, said Brad Blackwell, an executive with Wells Fargo [ WFC 34.79 +0.13 (+0.38%) ] Home Mortgage. "As they increase, people have more available equity."
(Read More: New Housing Fears: Home Prices Are Rising Too.)
Blackwell also pointed to increased consumer confidence, meaning borrowers now feel better about their ability to repay these loans. Both factors fueled a 19 percent jump in originations of home equity lines of credit at the end of last year, according to Equifax. In 2008, as housing was crashing, home equity line originations dropped 55 percent.
(Excerpt) Read more at m.cnbc.com ...
The majority of the US population is like the government, spend, spend, spend. Keep up with the Jones. Most of these people did not need new cars, new TV’s, expensive vacations and the list goes on. Now they will start crying, the bank is foreclosing on us, we can’t afford our mortgage payments. Let them lose everything they own.
“Cashing out” some equity to buy some more China-trash?
What could go wrong!?
This is probably how my sister-in-law is paying for the trip to Bora Bora. Why shouldn’t she? There’s always another bailout.
Fun with numbers...
HELOC’ss are up 20%!!! Oh but they fell 55% from peak to trough so the growth is off a much smaller base...
Housing starts up 28%!!! Oh but they fell 73% from peak to trough so the growth is off a much smaller base...
As a professional analyst I love seeing stuff like this.
Howdya do that, where do I enter the PIN number?
What is this equity of which you speak?
What could go wrong THIS TIME???
Yes, they can elect more democrats who will blame the innocent, then pilfer the IRAs of the thrifty.
I would think that reverse mortgages for those over 65 and the Baby Boomers facing long periods of unemployment would be more to blame than young people using home equity to prop up discretionary spending.
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