Bureau of the Census Home Equity Lines of Credit — A Look at the People Who Obtain Them Starting in the mid-1980’s, home Northeast, a region that contained owners (a median of 46 years mortgage interest payments only 20 percent of the Nation’s old versus 43 years). Compared became the only interest payments single-family home owners. Con- with other mortgaged owners, those the average homeowner was al- versely, 24 percent of owners with with HEL’s also — lowed to claim as an itemized tax HEL’s lived in the South, which deduction. This made home equity contained 35 percent of the Na- H Were more likely to be White lines of credit (HEL’s) popular. tion’s single-family home owners. (93 percent versus 89 percent) HEL’s are credit lines extended by a and less apt to be Hispanic financial institution to a homeowner Nationally, most homeowners with (3 percent versus 6 percent). based upon the equity in HEL’s (89 percent) lived in metro- politan areas, usually in suburbs (68 H Were more apt to co own the a home. percent) rather than in central cities property with a person of the This Brief profiles the 3.4 million (21 percent). All single-family opposite sex (79 percent compared single-family home owners who home owners were both less metro- with 71 percent). had HEL’s in 1991 and compares politan (79 percent) and less subur- ban (53 percent). H Had a higher median household them to the 26.5 million single- income ($57,211 versus $43,985). family home owners who had Persons with HEL’s were older other types of mortgages. (These H Were more likely to have owned and made more money. data apply to the single-unit proper- another home before they pur ty these owners both owned Homeowners with HEL’s were chased their current home and lived on.) In addition, the slightly older than other mortgaged (60 percent versus 55 percent). 646,000 owners whose HEL was their only mortgage are compared Why Homeowners Get a Home Equity Line of Credit to the 2.7 million whose HEL was a Percent of single-family home owners with a home equity line of credit (HEL), junior mortgage (i.e. they also had by why they took out the HEL: 1991 at least one other mortgage on their (Reasons are mutually exclusive. The universe includes only those property). who reported a reason.) Make additions, HEL borrowers were improvements, or repairs 54% to the property concentrated in the Northeast and in the suburbs. Consolidate debts 21% One-third (35 percent) of owners Purchase a consumer 10% with HEL’s resided in the product (car, furniture, etc.) Pay for educational or medical expenses 6% Make other types of 4% investments Invest in other real estate 3% SB/95 15 Issued June 1995 Other purposes 3% U.S. Department of Commerce Note: Percentages do not add to 100 due to rounding. Economics and Statistics Administration BUREAU OF THE CENSUS BUREAU OF THE CENSUS STATISTICAL BRIEF June 1995 Owners with HEL’s not only lived H Lived in much less expensive More information: in older homes, but had been homes (median value of $94,072 The data in this Brief were col- living in them longer. compared with $147,506). lected by the 1991 Residential Homeowners with HEL’s lived in Finance Survey (RFS), a survey of H Had lower median household about 70,000 residential property homes that were a median of income ($40,887 versus $61,777). owners, conducted as a follow-up to 27 years old, while other mortgaged owners resided in homes that were the Census of Population and Hous- H Were less likely to have owned a ing. A printed report with RFS data, a median of 24 years old. Addition- home built after 1980 (7 percent ally, those with HEL’s had been liv- Residential Finance, compared with 19 percent) and to Series CH-4-1, is available. Micro- ing in their home for a median of have acquired the home after 1980 13 years, 5 years longer than other data files from the RFS are avail- (26 percent versus 49 percent). able on both computer tape and mortgaged owners. CD-ROM. Contact Customer H Had lived in their homes longer Services (301-457-4100) for order- Debt was a smaller share of home (a median of 21 years versus ing information. value for owners with HEL’s. 12 years). For owners with HEL’s, median Contacts: total outstanding mortgage debt Women were more likely to have Home equity lines of credit — on the property was slightly higher a stand-alone HEL. Howard Savage ($48,145) than it was for other 301-763-8552 As mentioned earlier, most HEL mortgaged owners ($43,495). But borrowers (2.7 million of the 3.4 Statistical Briefs — the median value of their homes million) co-owned the property Robert Bernstein was considerably higher ($137,145 with a person of the opposite sex. 301-457-1221 compared with $88,885). As a But the remaining 703,000 did not; result, their total debt was a much about 50 percent of these borrowers This Brief is one of a series that presents smaller percentage of their home’s were women. Among the 499,000 information of current policy interest. It value (a median of 41 percent owners who did not co-own the may include data from businesses, compared with 55 percent). Since property and whose HEL was a ju- households, or other sources. All statis homeowners with HEL’s had owned tics are subject to sampling variability, as nior mortgage, around half were well as survey design flaws, respondent their homes longer, they would women. However, among the have more equity built up to classification errors, and data processing 204,000 owners who didn’t co-own mistakes. The Census Bureau has taken borrow against. the property and had stand-alone steps to minimize errors, and analytical HEL’s, two-thirds were women. statements have been tested and meet Homeowners with HEL’s were statistical standards. However, because This suggests that a significant pro- more apt to have multiple mort- of methodological differences, use portion of homeowners with stand- gages on the property (81 percent, caution when comparing these data alone HEL’s may have been widows 79 percent of which were an HEL or divorcees with an earlier first with data from other sources. plus a first mortgage) than other mortgage that had been paid off. mortgaged owners (11 percent). They also had bigger first mort- gages ($52,074 versus $47,064). Owners whose HEL’s were Most Outstanding Home Equity Lines of stand-alone mortgages were Credit Were Originated After 1987 even older. Number (in thousands) of single-family homes with an outstanding HEL, Homeowners whose HEL was the by year of HEL origination: 1991 only mortgage on the property were 824 a median of 54 years old, about a 684 decade older than those whose HEL was a junior mortgage. They also — 522 367 H Were less likely to have owned another home before they bought 268 their current one (45 percent 140 versus 63 percent). 24 71 35 6 0 H Were less likely to co own the 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 property with a person of the Year of HEL’s origination opposite sex (68 percent versus 82 percent).