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Back in the days when housing prices were rising, consumers happily borrowed against the equity in their homes and went shopping. According to Bloomberg Businessweek (Howley, 26 Nov 2012):
Americans had used their homes like credit cards to go on spending sprees during the 2000 to mid-2006 real estate boom, tapping their equity to buy cars, televisions and luxury cruises. Consumers used about $677.3 billion, or about $113 billion a year, from home equity loans for consumer spending, according to a 2007 paper by former Federal Reserve Chairman Alan Greenspan and Fed economist James Kennedy.
Today, after years of declining lending, Heloc originations will rise in 2012 and are expected to rise further in 2013. As the housing market recovers, consumers are expected to spend money, ?fueling purchases of goods like televisions and refrigerators? which in turn helps boost the economy.
For discussion:
What are some economic effects of increased home equity lending?
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