NEW YORK – Sept. 6, 2016 – A survey of 1,428 consumers released Aug. 24 by Discover Home Equity Loans reveals that the most popular use of home-equity loans for more than half of U.S. homeowners aged 30 to 34 who have owned a home for at least three years and taken out a home-equity loan is to fund short-term expenses, including vacations.
Many millennials are shunning credit cards, and they are finding that borrowing against their home is a less expensive way to attain funds.
According to Bankrate.com, the average interest rate on a home-equity loan was 4.88 percent for the week ending Aug. 17, and the average rate on a home-equity line of credit was 4.75 percent. In contrast, the average credit card rate was 16.1 percent.
Furthermore, Discover Home Equity Loans spokeswoman TJ Freeborn notes that interest on home-equity loans is tax deductible. Of the 51.3 percent of homeowners aged 30 to 34 who have taken out a home-equity loan, 43.3 percent did so to fund vacations.
Other reasons for the loans include emergency cash (41.8 percent), home remodels (41.1 percent), medical expenses (36.2 percent), and weddings (31.2 percent). Debt consolidation and home remodels were the top responses for other age groups.
Source: MarketWatch (08/24/16) Hoak, Amy