U.S. home equity currently stands at $14.4 trillion, a record high, and $1 trillion more than its pre-Recession peak, says a new report by consumer credit reporting agency Transunion.
Joe Mellman, senior vice president and mortgage business leader at TransUnion, says, "It has really come roaring back ... Consumers have been building up that equity over the last seven years or so," adding that as interest rates increase, home equity lines of credit (HELOCs) or loans could attract consumers looking to borrow money at a lower rate, CNBC reports.
"When rates were low, consumers were taking out equity by refinancing their mortgage," Mellman said. "Now, with [mortgage] interest rates up, a lot of people might not want to touch their original mortgage." In other words, if refinancing would mean paying a higher interest rate on your primary mortgage, it might not be a wise move. The average rate on a 30-year traditional mortgage is now 5.01 percent, according to Bankrate. The average interest rate on a home equity loan is around 6 percent.
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