Mortgage Lock‑In Spurs Recent HELOC Demand

Andrew Haughwout, Donghoon Lee, Daniel Mangrum, Joelle Scally and Wilbert van der Klaauw

No 20240806, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Mortgage balances, the largest component of U.S. household debt, grew by only $77 billion (0.6 percent) in the second quarter of 2024, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data. This modest increase reflects a substantial slowdown in mortgage origination; only $374 billion was originated during the second quarter, compared to an average of about $1 trillion per quarter between 2021 and 2022. Meanwhile, after nearly thirteen years of decline, balances on home equity lines of credit (HELOC) have begun to rebound, gaining 20 percent since bottoming out at the end of 2021. In this post, we consider the factors behind this upswing, finding that HELOCs have likely become an attractive alternative to cash-out refinancings amid higher interest rates.

Keywords: Consumer Credit Panel (CCP); HELOC; Home equity lines of credit (search for similar items in EconPapers)
JEL-codes: D11 (search for similar items in EconPapers)
Date: 2024-08-06
New Economics Papers: this item is included in nep-ure
Note: This analysis and the Quarterly Report are based on the New York Fed’s Consumer Credit Panel, which is comprised of credit report data from Equifax.
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