TransUnion Study Determines Need to Understand How Consumers May Use Such loans
A surge in home equity borrowing may soon be on the horizon. A new TransUnion (NYSE: TRU) study found that several dynamics are creating a market ripe for home equity origination growth, but a better understanding of how consumers use these loans may impact their interest in securing one. The findings from the study were released today at the Mortgage Bankers Association Annual Convention & Expo.
A major reason for expected growth in home equity borrowing is the fact that household home equity, currently nearing $15 trillion, has surpassed its prior “housing bubble” peak in Q1 2006 by over $1 trillion. Home equity is the difference between a home’s fair market value and the outstanding balance of all liens on the property.
Home equity levels have been rising at a rapid rate each year since hovering around $6 trillion between 2009 and 2011. While the S&P/Case-Shiller House Price Index (HPI) increased by 42% between Q1 2011 and Q1 2018, home equity levels outpaced home prices in that same timeframe.
These new market dynamics may begin to accelerate the home equity loan market. HELOCs represented the greatest number of home equity originations in 2017 at 1.2 million, showing a 2.3% year-over-year growth from 2016. This presents a market opportunity for lenders as HELOCs have extremely low vintage default rates and an estimated 70 million homeowners likely qualify for a home equity product.
To read the full story and to obtain more detailed information about TransUnion’s home equity lending study, please visit http://www.transunion.com/2018helocstudy.