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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Wyätt Gwyön who wrote (44876)11/6/2005 8:12:04 PM
From: ild  Read Replies (2) of 110194
 
As I understand Freddie numbers don't include HELOCs. I couldn't find 2005 HELOC numbers. Obviously FDIC and Fed Reserve have them somewhere. All I found is:

fdic.gov
According to data provided by Freddie Mac, homeowners liquidated some $211 billion in 2003 by refinancing their mortgages. According to the Federal Reserve, another $101 billion was liquidated by increased borrowing against home equity lines of credit (HELOCs).1 Taken together, this liquidation of home equity contributed an extra $312 billion to household cash flow during 2003, an amount of stimulus that almost equaled the $332 billion gain in after-tax income during the year.

federalreserve.gov
At the end of 2004, outstanding drawn HELOCs at all insured commercial banks totaled $398 billion, a 40 percent increase over 2003.

So in 2004 consumers drew about $115 Billion in HELOCs. I believe I read somewhere that in 2005 HELOC activity is much lower. I wouldn't be surprised if some HELOCs are being rolled into first mortgages. Option ARM looks to be a good program to consolidate debts.
Do you remember 2003 and 2004 stories about California investors descending onto some remote places in other states and buying cheap RE? I'd think that down payments to buy that RE were from HELOCs on their California properties. Right now HELOCs at 7% do not look that attractive as they were at 4% in 2003.

EDIT: If this proposal for not allowing tax deductibility for second mortgages is passed then I expect all outstanding HELOCs to be rolled into first mortgages. In this case Freddie will report even more cash-out refinancings.
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