Are More Homeowners Cashing In on Their Equity?

A picture of a young girl facing the camera, looking at a set of stacked coins and house miniature in front of her.

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Despite increasing equity, fewer homeowners are taking out home equity lines of credit. A March 18 report from ATTOM Data Solutions shows the number of HELOCs issued in the fourth quarter of 2021 was down 5.5% from the previous quarter, and 4.2% below the level issued in the fourth quarter of 2020.

HELOC mortgage originations fell from the third quarter to the fourth quarter of 2021 in 68% of the metro areas tracked. The largest decreases were in Atlanta (down 36.1%); San Antonio (down 23.3%); Houston (down 19.1%); Austin, Texas (down 18.5%); and St. Louis (down 15.9%).

But homeowners in some locales seem more apt to take advantage of their growing equity and to take out HELOCs in larger numbers.

The largest quarterly increases in HELOCs among metro areas with at least a population of 1 million in the fourth quarter of 2021 were in: Cleveland (up 32.7%); Buffalo, N.Y. (up 24.3%); Raleigh, N.C. (up 21.7%); Philadelphia (up 13.5%); and Detroit (up 10.6%).

A separate study from LendingTree analyzed the top motivations for homeowners to reach for their equity. Fifty percent of homeowners seeking a HELOC across 50 metros cited home improvements as their primary reason. Twenty-four percent of homeowners say they would use equity to help consolidate their debt.