Why HELOCs Make More Sense Than Refinancing in 2023
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    MARCH 21, 2023

    Why HELOCs Make More Sense Than Refinancing in 2023

    Mortgage rates are finally taking a long overdue breather. In 2022, home loan rates were caught in a tug-of-war between high inflation and the Federal Reserve’s actions to limit it. Now pulling back from the Fed’s rate-hiking campaign, mortgage rates are on a path to a new normal. MBA’s March 2023 Mortgage Finance Forecast puts the 30-year fixed rate at 6.4% in the first quarter of 2023, gradually falling to 5.3% by year-end1  

    Looking ahead through 2023, with mortgage rates still above 5%, it continues to make sense to take advantage of HELOCs since they allow homeowners to tap into their home equity without altering their primary mortgage.

    HELOCs remain a smart option

    Although mortgage rates have slowed, they remain relatively high. Homeowners no longer want to refinance their entire mortgage to access their equity. HELOCs allow them to borrow smaller amounts when they need it—keeping monthly payments lower and helping avoid unnecessary debt. 

    At the end of 2022, the average HELOC rate was at 7.62%. According to experts, that number is expected to reach 8.25% by the end of 20232. Although this rate is rising, HELOCs have much lower rates and initial costs than alternative options such as many credit cards at 20%3 or personal loans, which makes them attractive for debt consolidation or ongoing projects.  

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    https://www.mba.org/docs/default-source/research-and-forecasts/forecasts/2023/mortgage-finance-forecast-mar-2023.pdf

    https://www.bankrate.com/home-equity/home-equity-rates-forecast/

    https://www.federalreserve.gov/releases/g19/current/

     

    Customers refers to current and prospective customers of the financial institution through this content where “customer” is mentioned.

     

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