American homeowners today have amassed more than $5.8 trillion in equity, but are hesitating to make use of it, according to real estate data firm Black Knight Inc.
Yet, lenders are putting out more feelers than ever to encourage homeowners to tap their equity. Market research company Mintel reports that the share of direct-mail solicitations for home equity products increased by 30 percent annually in the first quarter of 2018. Banks are trying to grow their customer base by implementing new data programs to educate homeowners on what they could afford and do by tapping their equity. Citizens Financial Group Inc. president of consumer deposits and lending Brendan Coughlin tells The Los Angeles Times, "It’s time to see home equity lending come back," Coughlin said. "Each year we’re investing more."
Last decade’s mortgage crisis has probably made consumers hesitant too. Home prices fell 35 percent after the bubble burst, leaving many borrowers owing more than their houses were worth. People who tapped their equity to pay off their credit cards ended up struggling to meet their obligations, said Dan Alpert, managing partner at Westwood Capital, a New York investment bank focusing on real estate. “There’s a long-memory issue," Alpert said. “People got caught with home equity lines last time.