Home Equity Loan Rates Where is the Market Headed?

In states like California there has been a decline during the last four months in home equity loans and home equity lines of credit. Many analysts are blaming the fall in equity loans on the languishing home values and rising interest rates. Rates have risen to around the 8 percent range and look as though the Federal Reserve is likely to continue raising the rate. Some economists feel that this will spell the end of the home equity loan boom. Christopher Thornberg, senior economist of UCLAs Anderson Forecast warns, Keep an eye out. Its going to get worse and worse. However, other experts dont think this is the end at all. Mary Berg notes, Home equity loans have been growing at a large clip for years. Its definitely slowed, but people are still borrowing. Theyre finding other products that are more flexible in this rate environment.

Although many homeowners are likely to rethink using home equity loans for home improvement until the interest rates begin to drop again, there is likely to be a rise in the consumer use of a cash out second mortgage or a line of credit for the purposes of debt consolidation. With the increase in interest rates, many consumers are finding themselves stressed with bigger credit card payments. Borrowers that have a fixed rate mortgage on their homes would be better off leaving their 1st mortgage loan at a current low rate.

For now, home equity rates are still a better deal than credit card rates if the buyer is able to write the interest off on his or her taxes. A home equity line of credit can be used much like a credit card throughout its draw period. If borrowers take out an adjustable rate mortgage, even if it starts with interest only payments, they may find themselves in trouble if the interest rates continue to rise. A prime home equity loan, with a fixed rate may be a better, safer option than an adjustable rate loan. If low rates return there is always the option of a refinance in the future. Home equity rates may continue to rise, but there is such a variety of products that you may still find one that benefits you. Find a lender that you trust and discuss all your options.

Rebecca is a respected writer and article contributor to the Desert Magazine and Los Angeles Times. For the latest interest rates for fixed rate 2nd mortgages and interest only lines of credit, please visit the online resources at Second Mortgage & Home Equity Loans Online. Please visit these additional resource websites:

To get a free loan quote for a Home Equity Loan Rates for people with all types of credit, please check out the special loan offers for lower payments. If you need more loan advice about credit lines, take a look at the flexible programs offered for prime second mortgages.

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