Homeowners are searching for ways to leverage the equity in their homes due to the real estate market’s high prices as well as the general status of the economy due to economic pressure.
According to a report by the real estate portal RubyHome, Google searches for heloc, or a home equity line of credit, increased by 305 percent as of July 2023, reaching an all-time high. The states of Hawaii, Utah, and Colorado saw the most searches.
Accessing Home Equity Loan for Expenses
Owners can utilize a home equity line of credit to borrow money against the equity they have established in their houses to pay for bigger bills like a new roof or car payments.
The increase in search activity coincided with the Federal Reserve’s cycle of rate increases, which trickled into the housing market and caused mortgage rates to rise.
This prevents potential sellers from moving away and risking paying a higher interest rate on a new house.
Homeowners who purchased a few years ago, when prices were lower and borrowing rates were lower, may feel imprisoned.
If they have thought about purchasing a new home, they have likely seen the increasing property prices in the area and realized that the historically low interest rate they currently enjoy cannot be replaced, according to RubyHome CEO Tony Mariotti.
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High Demand and Low Supply Drive Up Housing Prices
Just a few weeks ago, mortgage rates were reaching recent peaks as the Federal Reserve’s larger fight against inflation had a significant negative influence on the housing market.
In the meantime, rising demand and a shortage of supply are pushing up housing prices to levels that are very close to their peaks from last summer.
Only three times in history have median sales prices exceeded $400,000, according to data from the National Association of Realtors.
The chairman of the Federal Reserve Board, Jerome Powell, also stated that the housing market needs time to stabilize after the central bank recently raised interest rates.
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