1.5M HELOCs to See Conclusion of Interest-Only Draw Periods

More than 1.5 million home equity lines of credit (HELOCs) will see interest-only draw periods end this year, with payments becoming fully amortizing, according to new data from Black Knight Financial Services (BKFS). This roughly 100,000 lower than the level set in 2016.

 

Black Knight estimated there were a little under $100 billion in outstanding unpaid principal balances (UPB) on HELOCs are facing resets this year, with an average $62,500 UPB per line of credit. On average, HELOC borrowers whose lines resetting this year will see payment increases of $250 per month, more than doubling current average monthly payments. Furthermore, one in five borrowers facing HELOC resets now have less than 10 percent equity in their homes, which will create refinancing difficulties—but this is far less than the 31 percent of borrowers facing resets last year.

 

“In 2017, 19 percent of active HELOCs are facing reset,” said Black Knight Data & Analytics Executive Vice President Ben Graboske. “This is the largest share of active HELOCs facing reset of any single year on record, although the approximate 1.5 million borrowers slated to see their HELOC payments increase this year is about 100,000 fewer borrowers than in 2016. With the lines beginning to reset this year and early into 2018, we’re seeing the last of the pre-crisis-era HELOCs that the industry has been focusing on since early 2014. After deceleration in early 2018, we will have a lull of several years in reset activity.”

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