Back to future: Housing to keep the US consumer party going

Home equity loans set for a comeback

A new report from TransUnion says consumers are about to start borrowing against the value of their homes in big numbers again.

They say about 10 million homeowners are expected to take out HELOC loans in the next four years and that more than $13 trillion is available.

Listen to this:

Lenders may now start to offer new HELOC products that are more attractive to borrowers with lower rates and potentially longer «draw» periods before principal has to be repaid.

Home equity lines can offer a borrower a 10-year interest-only term before principal payments kick in.

Borrowers may also use their home equity to consolidate other debt and lower interest rate payments.

And that’s the other reason for new HELOCs — to refinance old ones taken out 10 years ago. Borrowers may not want to pay the added principal, so they can refinance into a new loan and reset the draw period.

One of the crazy things about the housing boom/bust is that in hindsight, house prices weren’t all that crazy. If you compare the US to other countries, it’s still very affordable.

The whole thing just happened too fast.

What I think happens now is that it restarts but this time it happens in slow motion.

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