If your client is a homeowner, the odds are that their house is worth more than when they purchased it. In fact, on average, homeowners have more equity in their homes today than at any point in the last 35 years. The value of homes has shot higher over the past decade or so, but the total amount owed on mortgages has not. The total value of the U.S. single-family market hit an estimated $40 trillion last year (versus $17.9 trillion in early 2012). So now what?

Brokers know that rates have moved higher in 2023, but even at 7-8 percent a home loan generally carries far lower interest than credit card debt (which may be as high as 30 percent), especially after accounting for the tax deductibility of interest on a mortgage.

With $9.7 trillion in debt outstanding in early 2012, homeowners’ equity fell to 45.9%, its lowest point in figures that date back to the early 1980s. The housing market has improved dramatically, and home values have more than doubled in the 11 years since. Through the first quarter of this year, the single-family housing market was worth $41.2 trillion, a 129% increase from the 2012 low. But mortgage debt has increased by less than a third of what it was then. The $12.5 trillion dollars in mortgage debt outstanding today represents only a 28.9% increase from its 2012 low.

Real estate assets have seen the largest gain throughout the pandemic due to the rapid rise in home values. Orion’s brokers know that housing builds wealth. Real estate accounts for about a quarter of total household assets today. No one should use their home as an ATM. But there is untapped potential for consumers to rely on home equity lines of credit to sustain spending should the need arise. After declining on trend for nearly 13 years, home equity revolving credit balances rose for the fourth straight quarter in Q1 of 2023. The plunge in mortgage rates in the early days of the pandemic led to a surge in mortgage refinances,which can support households for years to come.

Consumer spending has proved resilient in recent years as pandemic-related factors have offset initial job losses, elevated inflation, and now higher borrowing costs. Fiscal packages at the onset of the pandemic ensured that the pandemic-induced recession was not a balance sheet one for households, and the lasting effects of that have supported consumer spending even as stimulus has ceased. Increased home equity due to the rapid rise in home values and a jump in mortgage refinancing are two additional factors that may support household staying power in the years to come.

Talk to your Orion AE about options. Just because rates have moved higher doesn’t mean that there aren’t options to help your clients eliminate car loans and credit card debt and lower monthly payments.