Record-High Tappable Equity Not Enough to Spur Homeowner Spending

Homeowners currently have the highest level of tappable equity ever recorded, yet memories of the housing crash, coupled with rising and variable interest rates are keeping them from tapping it.

The current collective tappable equity level sits at $5.8 trillion, 16 percent higher than the last peak recorded in 2006. Yet many homeowners are hesitant to use the cash in their homes as others did, often times to their detriment, during the housing crash a decade ago. In fact, consumer confidence in the housing market is diminishing today, CNBC reports. Doug Duncan, Fannie Mae’s chief economist said in a statement, "Tight supply and lackluster income growth continue to weigh on housing activity, and consumer expectations for home price growth over the next 12 months have moderated.”

HELOCs have variable interest rates, unlike the 30-year fixed primary mortgage, so the rate on a HELOC can change. A HELOC is therefore more risky because the Federal Reserve has been raising rates steadily, and HELOCs follow that. “Who wants uncertainty when it comes to monthly finances,” said Ben Graboske, executive vice president of Black Knight’s Data & Analytics division. “I think a lot of Americans look at, what are my payments? What is my income coming in and what are my payments going out? They want certainty that they can cover their costs and not worry about it.”

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