Are Low Mortgage Rates Taking A Back Seat to Home Equities?

Since the majority of American homeowners were able to refinance the home loan into a condensed low rate mortgage, what does the future hold in the industry? According to a new study released by the Mortgage Bankers Association of America, the new home equity credit lines taken out at banks and mortgage companies have skyrocketed by 77 percent during the first quarter of 2004. The dollar volume of new credit line applications has hurdled by 106 percent. The new trend in home equity credit lines is a reaction to the way home values are appreciating in dozens of real estate markets across the U.S.,

The home equity line of credit has been a prevalently used mortgage financing. Other mortgage experts and researchers have noticed the average credit line limit application increased from $71,932 to $83,630. To some mortgage industry insiders, it appears as though American homeowners are morphing into equity line junkies.

But, according to mortgage financial analysts, the average American market value is up by forty-four percent. Because, the vast majority of homeowners have taken advantage of low mortgage rates, they are realizing that they have enough equity to tap into their resources.

For homeowners of the mid-Atlantic, New England, California, and Florida, their property values have nearly doubled in a short span of time. The end result is Americans are fueling the credit line boom by not touching their low mortgage rates.

The new trend of home equity loans should not be as amazing as it seems. According to Jay Brinkman, vice president for research and economics of the Mortgage Bankers Association, the new boom in equity credit lines is an aftermath of the past 3-year refinancing boom. The low mortgage rates have stimulated the trend by which consumers, in large numbers, have been exercising their right to cash-out refinance. Thus, many more Americans have been granted the opportunity to tap into their equity without having to refinance their mortgage or worry about qualifying for a low mortgage rate.