New data provided by national credit bureau Experian and researchers at the Oliver Wyman consulting organization suggest that a rebound boom in equity-tapping is underway. Owners have pulled out $120 billion in new home equity credit lines in the last 12 months, a 27% increase in volume over the year earlier.
In some states, new home equity line borrowing is exploding — up 169% in Wyoming, 85% in Oklahoma, 79% in Arizona, 53% in Florida and 52% in Ohio. Dollar volumes of new lines are highest in areas with the most expensive housing, especially along the West Coast and the Northeast. In California alone, nearly $6 billion in new equity credit lines were originated in the last 12 months, according to researchers.
In many cases these are not small lines, either. For owners with high credit scores, the average amount that can be drawn down on new lines is just under $120,000. For those with good but not perfect credit, dollar limits average in the $40,000 to $60,000 range.
Home equity credit lines — commonly referred to as HELOCs — typically are second mortgages. Unlike standard second loans, HELOCs are structured as open lines of credit that the borrowers can access up to a stated limit. Lines are often used to pay for home renovations, college tuition and other recurring big-ticket expenses
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