Home Equity Lines Being Drawn Down at Unprecedented Rate
US borrowers appear to be hoarding cash and using home equity lines of credit (HELOCs) to pay bills rather than dip into their savings, according to CreditSights.
HELOCs have been drawn down at an unprecedented rate in late September with total lending by banks rising by almost $40 billion in one week. Although it is difficult to know exactly what the money is being used for, the draw downs coincide with a rise in non-transaction bank deposits – mostly non-corporate savings accounts – and a slowdown in credit card borrowing, CreditSights says.
We believe that some of that increase in savings could be borrowers effectively hoarding cash by using the HELOCs to cover planned expenditures rather than dip into their savings or use up all of their monthly incomes.
For details see: A HELOC’s Chance in HEL: Examining Home Equity Borrower Behavior.
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