Americans currently have $28.7 trillion in home equity. According to a recent analysis from LendingTree, even if the amount has decreased from a record $31.8 trillion in the second quarter of 2022, it still has a considerable impact on the global economy.
All in all, each owner-occupied housing unit throughout the nation has around $334,000 in equity. One effect of growing property prices and values is the enormous amount of equity that Americans have in their homes.
Early in August, Wells Fargo analysts made the observation that huge house price increases may hold consumers afloat when emergency reserves run out. Rising house prices appear to be an “underappreciated tailwind” for homeowners, according to the bank.
Record-Breaking Home Equity
The analysts stated in a statement that “homeowners have more equity in their houses today than they had at any point in the 35 years between 1987 and 2022. Yes, rising rates increase the cost of borrowing, but a house loan often has far lower interest than credit card debt, especially when tax deductions for mortgage interest are taken into consideration.
The average home equity loan offering across all 50 states was $104,102, according to LendingTree’s review of 580,000 offers made between January 1 and July 31, 2023.
The states that offered loans exceeding $135,000 were Massachusetts, New York, and Vermont, which had the highest average loans. Additionally, borrowers in Mississippi, with proposals of around $75,000 each, earned the lowest bids.
However, a senior economist at LendingTree, Jacob Channel, emphasized that taking out a home equity loan has significant disadvantages. In addition to being more difficult to qualify for than other forms of loans, defaulting on a home equity loan can have major negative effects, according to Channel.
Source: Business Insider