ONTARIO, Calif.—Rising home values across California have given homeowners a reason to tap into their equity and spend money, according to new data from the California Credit Union League.
The league reported that a number of California credit unions have seen an increasing number of people tapping home equity through lines of credit and loans, as well as cash-out refinance mortgages in second-quarter 2016 compared to the same period a year ago (and prior years before).
The league cited data from RealtyTrac that showed nearly 5.2 million homes with mortgages across 11 different metropolitan statistical areas in California—or 73% of more than seven million mortgages—had at least 20% equity as of June 2016. There are nearly 11.7 million local residential properties located within these metro areas in total.
Data from 339 credit unions in California reported for the second quarter of the year shows, according to the CCUL:
- Originations (incoming pipeline) for the combined category of Home Equity Lines of Credit (HELOCs)/home equity loans (second-mortgages) increased 15% to more than $2 billion.
- Altogether, HELOCs and home equity loans (second-mortgages) outstanding increased 5% to more than $10 billion (up from a low of $9.2 billion in 2013 but down from $14.2 billion in 2008).
- Originations (incoming pipeline) for first-mortgages decreased 10% to $7 billion.
- First-mortgages outstanding—which includes cash-out refinances as a subset—increased 13% to $53.2 billion, hitting a record dollar amount (and rising 53% from a post-recession low of $34.8 billion in 2010)
- Meanwhile, the league reported, statewide credit union membership rose 5% to a record 10.7 million individuals (339 credit unions). Total lending increased 15%, hitting a record $105 billion loaned-out. And total deposits increased 9%, hitting a record $144 billion.
“The local surge in home-equity lending and cash-out refis reflects a strong national trend in homeowners increasingly remodeling their homes and enhancing their properties,” said Dwight Johnston, chief economist for the California Credit Union League.
Johnston added that while many neighborhoods across California have enjoyed rapid price appreciation, some select areas still have a percentage of homes that are underwater or have little equity.
“As more of these homeowners see the light of day with values rising, we’ll see more of this remodeling trend,” Johnston said. “Pulling out home equity seems to have legs and is here to stay, especially since job growth across California remains strong and is supporting household stability.”