Twenty-Eight Percent Of Home Equity Borrowers Over 60 In 2017

The rich are getting richer, at least in terms of household wealth.

The Wall Street Journal reports that, despite a strong recovery of home equity and prices this past year, the composition of wealth ownership has changed, becoming increasingly concentrated in older households with high credit scores.

That’s according to the New York Fed’s quarterly household debt and credit report, which is based on data from Equifax. The report shows that older borrowers have become far more likely to tap into their home equity than in the past. Homeowners can tap their equity either by using cash-out refinances that refinance their mortgage into a new, larger mortgage loan, or by taking out a line of credit.

In 2006, consumers over 60 were least likely to tap their home equity. Only 13 percent of borrowers who tapped equity fell into the over-60 category. Now, according to 2017 data, it’s consumers under 45 who are least likely to do so, while senior citizens are more than twice as likely (28 percent) to tap into their equity as before.

Notably, household wealth has moved away from the under-45 group, as well as from Americans with lower credit scores, as strict lending standards have kept many of these consumers from becoming homeowners in the first place – let alone tapping into their equity.

Across the board, American household debt is up 0.5 percent in the first quarter compared to the previous quarter, totaling $13.21 trillion.

But it’s not all bad news. Household debt is climbing slower than it could be, as mortgage debt has been increasing at a slower rate than in the past, and that comprises the majority of household debt. The delinquency rate on mortgages showed improvement, although delinquencies on credit cards and auto loans are up.

The share of debt that falls into the “seriously delinquent” category (that is, more than 90 days late) has dropped to 3.11 percent, down 0.01 percent from Q4 – and down from 3.37 percent year over year.