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The Mortgage101 Blog

FROM THE MORTGAGE101 BLOG

Rising Prices Help Home Equity Loans Make A Comeback

Many U.S. homeowners finally have a good chunk of equity in their homes again. And they are ready to put it to use. During the first quarter, the number of new home-equity lines of credit (HELOC) rose to 230,200, a nine percent increase from the year before, according to credit reporting company Equifax. With the average HELOC growing to $100,207, those loans meant that homeowners had the potential to use up to $23.4 billion, a level not seen in over six years, since 2008. HELOCs allow homeowners to have an open, accessible line of credit that they can make withdrawals from as needed and only have to pay the interest owed for an initial period. Home equity loans, on the other hand are like standard loans where the borrower starts out with a lump sum and payments plus interest begin immediately. These loans are popular with homeowners who want to do some home improvement, pay off other debts, or need to pay for a financial emergency. HELOCs were very popular during the housing boom when everyone had plenty of equity to tap, but after the mortgage meltdown new loans all but disappeared. Yet now after home prices jumped dramatically last year and continue to rise, lenders are willing to increase their home equity volume again. Historically low mortgage interest rates are aiding the pick-up in HELOCs, as the average rate fell to 5.01 percent in June, a decrease from 5.16 percent the previous year, according to mortgage data website HSH.com. As home equity lending has grown, so have the default rates on older HELOCs. Equifax reported that the delinquency rate on loans originated in 2004, whose interest-only periods ended this year have grown to 5.3 percent as of June, up from 4.0 percent last December. Unfortunately, home equity lines and HELOCs can be dangerous since they use the actual home as collateral. That is the risk borrowers must face to enjoy the use of their equity. more

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Mortgage Rates by Product

Select the mortgage product below to view the rates in your area, or click on the graph icon to see how rates have fluctuated over a 30 day period.

PRODUCT RATE POINTS APR CHANGE TREND
30 Year Fixed 4.45% 0.00 4.53% 0.069% CA 30 Year Fixed Rate Trend
15 Year Fixed 3.51% 0.00 3.64% 0.035% CA 15 Year Fixed Rate Trend
3/1 ARM 3.12% 0.00 3.16% 0.010% CA 3/1 ARM Rate Trend
5/1 ARM 3.27% 0.00 3.32% 0.036% CA 5/1 ARM Rate Trend
7/1 ARM 3.60% 0.00 3.65% 0.065% CA 7/1 ARM Rate Trend
10/1 ARM 3.93% 0.00 3.98% 0.015% CA 10/1 ARM Rate Trend
Home Equity Loan - 10 Year 6.55% 0.00 0.00% 0.007% CA Home Equity Loan - 10 Year Rate Trend
Home Equity Line of Credit 4.76% 0.00 0.00% 0.002% CA Home Equity Line of Credit Rate Trend
Home Equity Loan - 15 Year 6.73% 0.00 0.00% 0.006% CA Home Equity Loan - 15 Year Rate Trend