New Inside Mortgage Finance research shows that home equity loan originations in the United States topped $14 billion in this year's second quarter -- an increase from $12 billion a year earlier and the best quarter since 2009.
According to Guy Cecala, publisher of Inside Mortgage Finance, most of the loans are home equity lines of credit (HELOCs) and not fixed-rate second mortgages. Cecala forecasts that home equity loan originations could hit $52 billion this year, making it the busiest since '09. However, that total would still pale in comparison to pre-crisis activity. There were $430 billion in home equity originations as recently as 2006. Cecala remarks, "That gives you an idea of how far it's fallen. Yes, we are seeing a rise in home equity lending this year, but it's up from near-record lows."
Nevertheless, the HELOC market is the best in recent years due primarily to rising home prices. During the first seven months of this year, residential values in 20 U.S. cities were up 12.4 percent year over year in the S&P/Case-Shiller index -- the biggest annual gain since the 12 months ended February 2006.