Consumers Shy Away From Equity Loans
This New York Times article shows an increase in buyer reluctance to take on a second mortgage. As long as the trend shows consumers becoming more fiscally responsible or conservative, refraining from commonplace risks from the past like Helcos, also known as tapping into lines of home equity, will continue.
The article found a peak in home equity loans back in November 2008, making up a total of 13.3% of all residential loans. But home equity loans dropped to a sagging 3.2% six months later.
Another reason is blaringly simple: The housing crash created homeowners that no longer have enough stake in their own property to qualify for such a loan. We reported earlier that 1 out of 7 households with mortgages are either in foreclosure or delinquent on payments.
Mortgage News Daily reports in this article another reason for ditching Helcos has to do with a building standstill. Builder confidence in the market for newly built, single-family homes declined one point this January as concerns about the poor job market and large number of foreclosed homes for sale continue.
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