According to the latest Mortgage Monitor Report from the Data and Analytics Division of Black Knight Financial Services, the average borrower of a HELOC (home equity line of credit) resetting in 2017 will face an average increase of $250 per month over their current HELOC payment – in some cases doubling their current payment. The loans typically have a 10-year period with interest only payments before fully amortizing. According to Black Knight, 19% of active HELOC’s are facing a reset in 2017. Valued at just under $100 billion, they represent the largest share of active HELOC loans facing reset on record.
“One-third of borrowers whose HELOCs will reset in 2017 have less than 20 percent equity in their home, making refinancing problematic. One in five have less than 10 percent, and one in 10 are actually underwater. Even that reflects improvement in home prices, though; last year 45 percent of borrowers facing reset had less than 20 percent equity and nearly 20 percent were underwater.” Said Black Knight Data & Analytics Executive Vice President Ben Graboske.
Key takeaways:
- More than 1.5 million home equity lines of credit (HELOCs) will see interest-only draw periods end in 2017, with payments becoming fully amortizing, roughly 100,000 less than in 2016.
- Just under $100 billion in outstanding unpaid principal balances (UPB) on HELOCs are facing resets in 2017, with an average $62,500 UPB per line of credit.
- On average, HELOC borrowers whose lines reset in 2017 will see payment increases of $250 per month, more than doubling current average monthly payments One in five borrowers facing HELOC resets in 2017 have less than 10 percent equity in their homes, making refinancing problematic; this represents a decline from 31 percent of borrowers facing resets last year.
Click here to read the full Report.
