Ever since the epic housing crash of the last decade, homeowners have been incredibly conservative with their housing debt.
Home prices rose, at first slowly and now quite dramatically, yet owners held back on taking out all that new-found equity. That is about to change — by a lot.
About 10 million homeowners are expected to take out home equity lines of credit in the next four years, according to a new report from TransUnion.
That would be more than double the amount of originations between 2012 and 2016. This comes as the amount of available home equity has jumped to more than $13 trillion today from $6.3 trillion in 2011, the bottom of the last housing crash.
HELOCs, which are often loans after the primary mortgage, usually rise and fall along with home equity, but that didn't happen following the recession. There was a significant pullback in lending, as banks considered the loans too risky and too difficult to originate, given the stricter underwriting guidelines that were implemented.
Some lenders got out of the business because there just wasn't enough demand. Borrowers simply didn't have the equity because home values had fallen so far. Even as values rose, borrowers didn't rush in immediately.
"I think it is some of the hangover. On the consumer side there are some residual feelings," said Joe Mellman, senior vice president at TransUnion.