Home-Equity Lines of Credit Being Marketed as Broader Mortgage Market Lags

AnnaMaria Andriotis reported in yesterday’s Wall Street Journal that, “At hardware stores along the U.S. East Coast in recent weeks, TD Bank has been trying to persuade shoppers to think bigger than paint and plumbing supplies: The bank wants them to start taking cash out of their homes again.

“The TD Bank tour bus, equipped with a galley kitchen and iPads where homeowners can start the application process, is part of a marketing push unusual for the mortgage industry since the housing bust.

As the broader mortgage market remains in the doldrums, banks are again touting home-equity lines of credit, which allow homeowners to draw down the equity in their home as they need the cash, as well as cash-out refinances, which involve taking cash out of a home while refinancing and ending up with a larger mortgage balance.”

The Journal article stated that, “The effort is gaining steam as banks try to offset faltering mortgage originations and a refinancing wave that is fizzling out. Lenders are betting that offers for home-equity lines of credit, or helocs, will resonate with many borrowers whose home values are higher than they were just a couple of years ago and who need cash for renovations or other expenses after holding on to their homes for longer than expected.

“Lenders extended just over $156 billion in home-equity lines of credit last year, the largest dollar amount since 2007, the beginning of the housing bust, according to new figures from mortgage-data firm CoreLogic Inc. That marks a 24% increase from 2014 and a 138% spike from 2010 when new approvals hit a low point.”

The Journal writers did point out that, “The volumes are nowhere near the amounts given out before the housing bust, when lenders were approving more than $300 billion in credit lines a year. And housing analysts said it is unlikely that equity lending will return to those levels at any point in the near future.”

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