Originations soared in the third quarter of last year, per TransUnion data released last week. The reason for this is that a homeowner might ideally want to buy another house with different features, but either can't afford a higher mortgage rate or doesn't want to give up their 3% bargain, so instead of doing a cash-out refinance, homeowners are turning to HELOCs, which let homeowners borrow some amount of money — less than the value of the whole house, as with a refi — to make home renovations, pay down credit card debt, deal with expenses, etc.
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Home equity loans are booming — here’s why
To put it in fancier parlance, "Borrowers can preserve the low rate on their first mortgage while tapping equity to meet cash needs," write the authors of the Urban Institute report.
