Magazine article Mortgage Banking

Black Knight: HELOCs Face Monthly Payment Spikes at Reset

Magazine article Mortgage Banking

Black Knight: HELOCs Face Monthly Payment Spikes at Reset

Article excerpt

Evaluating data as of the end of July 2014, at least 2.5 million borrowers with active home-equity lines of credit (HELOCs) that are poised to reset during the next three years are facing an average payment increase of $250 per month.

That was among the findings in the July Mortgage Monitor report from the Data and Analytics Division of Jacksonville, Florida-based Black Knight Financial Services.

Kostya Gradushy, manager of Research and Analytics with Black Knight, said the average projected payment increase is based on current HELOC balances. But depending on borrower behavior between now and the time of reset, actual payment increases could change.

"Black Knight's analysis of outstanding HELOCs that have yet to reset--some 2.5 million between 2015 and 2017--is based on current utilization ratios," Gradushy said. "Currently, borrowers whose HELOCs will reset over the next three years are utilizing just under 60 percent of their available credit. Further draws on these lines--for those that have not been locked--could result in 'payment shock' after they are reset that is even higher than the national average of $250 per month. …

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