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Mortgage Lock‑In Spurs Recent HELOC Demand

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Abstract
Mortgage balances, the largest component of U.S. household debt, grew by only $77 billion (0.6 percent) in the second quarter of 2024, according to the latest Quarterly Report on Household Debt and Credit from the New York Fed’s Center for Microeconomic Data. This modest increase reflects a substantial slowdown in mortgage origination; only $374 billion was originated during the second quarter, compared to an average of about $1 trillion per quarter between 2021 and 2022. Meanwhile, after nearly thirteen years of decline, balances on home equity lines of credit (HELOC) have begun to rebound, gaining 20 percent since bottoming out at the end of 2021. In this post, we consider the factors behind this upswing, finding that HELOCs have likely become an attractive alternative to cash-out refinancings amid higher interest rates.

Suggested Citation

  • Andrew F. Haughwout & Donghoon Lee & Daniel Mangrum & Joelle Scally & Wilbert Van der Klaauw, 2024. "Mortgage Lock‑In Spurs Recent HELOC Demand," Liberty Street Economics 20240806, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:98633
    Note: This analysis and the Quarterly Report are based on the New York Fed’s Consumer Credit Panel, which is comprised of credit report data from Equifax.
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    More about this item

    Keywords

    Consumer Credit Panel (CCP); HELOC; Home equity lines of credit;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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