Study Reveals The Top Uses of Home Equity Loans by City

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LendingTree®, the nation’s leading online loan marketplace, today released its study on the top uses of home equity loans by city.

LendingTree assessed home equity loan requests since the start of 2018 to reveal the primary reasons borrowers are utilizing the funds and compared the data across cities to find regional biases in how home equity loans are used. The study also provides other metrics including loan size, LTV and the age of the borrowers. LendingTree data tracks six uses for home equity loans — home improvement, debt consolidation, retirement income, investment property, emergency funds and other uses.

“Home prices have been steadily increasing and have now surpassed the pre-financial crisis highs,” said Tendayi Kapfidze, LendingTree’s Chief Housing Economist. “While this may pose a challenge for those looking to purchase homes, those who own homes can stand to benefit by leveraging the growing equity in their homes, using those funds for other expenses.”

“Responsible home equity borrowing can be a valuable source of funds for life events,” Kapfidze added. “It’s important to note that this new wave of home equity lending is far different from the equity extraction that occurred prior to the financial crisis, and lending standards are much more stringent today. Most home equity borrowers today have far higher credit scores and borrow less of the accumulated appreciation in their home.”

Key findings from the study include:

Home improvement tops the list of uses for home equity loans. The most common use was home improvement, at 43 percent of home equity loan requests.
Real estate investors borrow the most. Borrowers who were looking to invest in another property had the highest property values and requested loan amounts. For property investments, borrowers requested an average of $103,625.
For non-property investments, which likely include small businesses, borrowers requested $80,241.
Just over 1 percent of requests were to fund retirement. Not surprisingly, this cohort had the highest average age of 63 — 12 years above the next highest average age.
A small share accessed their home equity for emergency expenses. This group had the lowest loan amount requested of $35,747 and kept their LTV low at 51 percent.
Debt consolidators push the limits on LTV. Borrowers looking to consolidate debt had the highest LTV of 74 percent.

Home Equity Summary
Loan Purpose	Share of Requests	Average Property Value	Average LTV	Average Age of Borrower	Average Loan Amount
Home Improvement	42.9%	$206,284	67%	48	$38,662
Debt Consolidation	38.2%	$206,435	74%	49	$37,000
Other	9.3%	$227,529	68%	51	$63,633
Other Investment Purposes	7.8%	$252,992	70%	47	$80,241
Retirement Income	1.3%	$293,388	56%	63	$74,207
Investment Property	0.3%	$301,025	71%	48	$103,625
Emergency Expense	0.2%	$212,213	58%	51	$35,747