Tapping one’s home for cash is a “thing” again, according to the Wall Street Journal. Home prices around the nation are increasing, and with that, a growing confidence in home equity.
Borrowing via home equity lines is at the highest level since the housing market crashed in 2008, according to the Journal. Home-equity line originations rose 8 percent to nearly $46 billion in the second quarter, according to credit-reporting firm Equifax. Borrowing through cash-out mortgage refinancings rose 6 percent to $15 billion, according to Freddie Mac.
Faith in rising home values is helping to spur the borrowing frenzy. Home sale prices nationwide rose 40 percent to $263,800 in June, the highest on record, up from $187,900 at the start of 2014, according to the National Association of Realtors.
Low interest rates on home-equity loans is another factor. Credit cards average 16.7 percent interest, while the average interest rate on a home-equity line is roughly 5.6 percent, according to Bankrate.com. [WSJ] — Amanda Rabines