Real Estate News

Home Equity Lines of Credit could offset uncertain housing future

Published: 07 Feb 2017

The potential uncertainty of 2017 real estate may bring changes in the most-used means of financing. A home equity line of credit (HELOC) offers a possible future for those in need of home loans and other lending options. However, while one source at least suggested that there's room for more HELOC use, the Federal Reserve's plans to raise rates could also put these in confusion, making them more costly.

Credit Union Times spoke to Keith Pipes, executive vice president of Wescom Credit Union Lending about the money the firm stands to make off of HELOCs alone in the coming year. Pipes said that the amount of HELOC value at Wescom "was almost nothing in 2011, and $12 million in 2012."

"We've ramped it up quite a bit thanks in a large extent to the increase in equity in our marketplace, but also reaching out to our members and encouraging them to consider us for their home equity line of credit," he added.

The Federal Reserve may not be able to directly affect the rates associated with a HELOC, but as The Mortgage Reports stated, adjustments to the Federal Funds Rate and Prime Rate could have a ripple effect, pushing the HELOC rate up as well. Facing this possibility, home owners may prefer to handle their existing credit while they can and avoid unpredictable changes.

Despite expectations that the rates will go up, the Fed did not take this action on Feb. 1, as some thought. In a statement, the organization said it would use, "realized and expected economic conditions," to decide how it makes future adjustments. In the meantime, the Fed said it would keep the current federal funds rate and predicted a rise in inflation to 2 percent. It also noted apparent improvements for the labor market.