Home Equity Mortgage Loans Make a Comeback

In a powerful turn around for the San Diego real estate market new data shows home equity loans surging again.

Home equity loans and home equity lines of credit (HELOCs) were some of the first types of mortgages to suffer when the housing market melted and lenders slashed borrowers’ credit lines. Considering the little security these types of loans provide lenders many would have thought they would be the last form of credit to see come back, if at all.

However, new research by Moody’s reveals a major uptick in this form of second mortgage lending. In fact, HELOCs are expected to have jumped 30% this year and are expected to do the same in the New Year, hitting over $100 billion in loan volume annually.

This is great news for the San Diego real estate market and everyone from homeowners to investors and real estate agents to those interested in buying a home.

This surge in home equity mortgages not only signals a loosening in lending but confidence in the rebound and a positive outlook for continually rising home values.

For a start, a rise in home equity lending is good for all homeowners. It provides a financial cushion and can be one of the best ways to grow a nest egg for the future. However, just because you may once again have access to a significant amount of funds from your home’s equity doesn’t mean you should abuse it or use it for every day purchases.

Of course many will quickly forget recent financial lessons, and especially with the current holiday season will end up using these funds for all types of gifts and splurges. Thankfully this rise in consumer spending will help to improve the economy, create jobs and in turn keep boosting house prices, especially for those in California where we have already seen great improvement.

For real estate investors this means more buyers armed with down payments to buy new homes, as well as rising values. Plus, more home equity also means more San Diego homeowners willing and able to sell.