HELOC Balances Jump 10.9% to $446 Billion as Homeowners Shun 6% Mortgage Refinancing
Updated
Updated · WOLF STREET · May 14
HELOC Balances Jump 10.9% to $446 Billion as Homeowners Shun 6% Mortgage Refinancing
1 articles · Updated · WOLF STREET · May 14
$446 billion in HELOC balances were outstanding in Q1, up 3.7% from Q4 and 10.9% from a year earlier, while total mortgage balances barely rose 0.16% to $13.19 trillion.
3% legacy mortgages are steering borrowers toward HELOCs to tap equity: adding a smaller 8%-9% second lien is often cheaper than replacing an existing low-rate loan with a larger 6% refinance.
41% growth since Q1 2021 has lifted HELOC exposure, but broader household housing leverage stayed contained, with the housing-debt-to-income ratio dipping to 58.0%, the third-lowest on record.
1.09% mortgage and 0.95% HELOC 90-plus-day delinquency rates remained low by two-decade standards, and 59,160 foreclosures in Q1 were down 4.1% from a year earlier.
65% of mortgages now carry government backing, shifting much of any future housing-loss risk from banks to taxpayers if home prices plunge or unemployment surges.
Is the boom in home equity loans a clever hack for homeowners or the first tremor of a new housing crisis?
With taxpayers now backing most mortgages, are rising FHA delinquencies a warning sign of a future government bailout?