Erik Schmitt, Executive at Chase Home Lending Consumer Direct, reminisces about the chaotic economic landscape that erupted in 2020 amid the COVID-19 outbreak. “The housing market and wider economy were rife with uncertainty,” he notes. As a result, giants like Chase and Wells Fargo hit pause on their home equity lines of credit (HELOCs), reflecting the unpredictable tides affecting jobs, interest rates, and real estate values alike.
The HELOC Comeback After Five Years
Jumping ahead to the present, surging home values have reignited consumer interest. This renewed appetite has prompted Chase to make its long-awaited return to the HELOC arena with a fresh product—its first since the 2020 hiatus.
Schmitt explains, “Post-pandemic, many homeowners refinanced, locking in first-mortgage rates lower than those now prevailing. This new offering lets them responsibly unlock equity without disturbing their original mortgage terms.”
The Shifting Landscape: Why HELOCs Are Back in Vogue
The backdrop for Chase’s HELOC revival is a transformed rate climate. During the pandemic, the favored route for many was cash-out refinancing, thanks to historic mortgage lows. Today’s environment, characterized by elevated mortgage rates, dims the appeal of refinancing. Consequently, HELOCs have reemerged as a practical alternative.
Mortgage rates recently touched 8.10%, the lowest point since May, per Bankrate’s latest lender survey, retreating from a sharp spike of 10% seen early in 2024.
Key Features of Chase’s Latest HELOC
- Available nationwide except in Texas, where regulatory nuances still pose challenges.
- Borrowers can access up to 80% of their home’s appraised value—standard fare for equity lines.
- Credit limits range from $25,000 (with a $10,000 minimum in Michigan) up to $400,000.
- Loan term extends to 30 years, with draw periods lasting between five and ten years, depending on the customer’s choice.
At closing, borrowers must be ready to tap at least 85% of their available credit line in a lump sum. Early results have exceeded Chase’s projections, prompting an expansion of their support team to keep pace with growing demand.
Looking Ahead: Chase’s Expansion Plans
Schmitt shares that Chase intends to increase its HELOC marketing efforts and considers diversifying its homeowner product portfolio. “Texas’ unique legal landscape requires tailored solutions,” he remarks. “We’re actively exploring other financial products that could serve homeowners better.”