The number of consumers who take out a home equity line of credit is expected to double over the next five years, according to a new report released today at the Mortgage Bankers Association’s 2017 Annual Convention and Expo by TransUnion.

The report shows about 10 million consumers are expected to take out a HELOC between 2018 and 2022, more than doubling the 4.8 million who took out HELOCs in the previous five-year period from 2012 to 2016.

“With aggregate home equity surpassing that of the housing boom in the mid-2000s, TransUnion is projecting between nine and 11 million consumers will originate HELOCs over the next five years,” said Joe Mellman, TransUnion senior vice president and mortgage line of business leader. “While long-term projections such as this are difficult, broadly we expect there will be approximately 10 million HELOCs originated between 2018 and 2022, driven primarily by continued home equity growth and a relatively robust economy.”

The company projects 1.4 million new HELOC borrowers in 2017 and 1.6 million in 2018, an increase of about 30% from the previous two-year period of 1.1 million in 2015 and 1.2 million in 2016.

Rising home prices and increase in home equity is beginning to fuel higher interest in HELOCs, TransUnion explained. The Case-Shiller home price index rose as high as 185 in 2006, but dropped to 134 by 2012. In July this year, the index increased past its previous peak to 194, and is expected to continue rising over the next few years to well over 200.

“While HELOC originations often track with home equity, which is correlated to rising home prices, we found that the rebound in HELOCs diverged from the recovery in home values following this past recession,” Mellman said.

Home equity stood at $13.3 trillion in 2005, but dropped down to $6.3 trillion in 2011. However, since then, home equity once again hit $13.3 trillion in 2016, but HELOCs still lag 2005 levels by 1.2 million originations.

“There are many dynamics in play as to why consumers were not opening HELOCs at a higher rate,” Mellman said. “One driver may be the ‘hangover effect’ of a once-in- a-lifetime mortgage crisis.”

“Another factor could be limitations in supply, as many lenders exited or reduced their HELOC operations during and after the last recession,” he said. “Other factors such as competition from other credit products, like the remarkable surge in personal loans over the past few years, doubtless also have had some impact. But we believe those effects have and will continue to abate, allowing for a resurgence of this compelling credit product.”

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