Mortgage rates continue to be high, with the 30-year rate at 6.85% as of June 5, causing difficulties in homeownership for many Americans. While inventory is growing and home sales are slowing, affordability remains a significant issue. As a response, homeowners are increasingly using home equity loans or lines of credit instead of refinancing. This trend is due to the comparatively lower rates on these loans. Financial institutions have also started bundling these equity loans into bonds for investors, indicating Wall Street's acknowledgment of this shift.
"Despite growing inventory and slower home sales, affordability remains a key challenge. More sellers are cutting prices, but high rates and elevated prices mean the income needed to buy a home is still well above pre-pandemic levels."
"For some people who are looking to do home renovations or repairs, a HELOC or home equity loan may provide more favorable interest rates than refinancing their mortgage."
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