Homeowners Tap Into Their Rising Home Equity

Published On Oct 18, 2024, 9:00 AM

Homeowners in the U.S. are increasingly borrowing against their home equity due to rising property values, which have provided them with significant equity. The average homeowner now has about $315,000 in home equity, a $129,000 increase since the beginning of the COVID-19 pandemic. The demand for home equity lines of credit (HELOCs) and home equity loans has surged, with HELOC balances rising 20% since 2021. This borrowing trend is partly driven by lower interest rates on home equity loans compared to credit lines, providing homeowners financial flexibility, especially during uncertain economic times.

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The increase in borrowing against home equity could indicate a robust housing market and consumer confidence, which may positively impact related sectors such as home improvement, financial services, and real estate. Investors may want to consider stocks linked to home improvement retail or banks offering competitive home equity products.

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As borrowing through HELOCs and home equity loans increases, it could reflect on consumer spending patterns towards renovations and repairs, which benefits companies in the home improvement sector. The performance of such companies could be seen as a positive growth outlook in the context of rising consumer debt against home equity.

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