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Home equity could be a $35 trillion lifeline for Americans if recession strikes. Here's what to know.

The article from Business Insider discusses the potential economic implications of homeowners tapping into their home equity through Home Equity Lines of Credit (HELOCs) as the housing market cools. It highlights that with rising home values over the past few years, many homeowners have significant equity in their homes, which they could use to fund consumption or investments. However, this trend could lead to increased consumer spending, potentially staving off a recession by boosting economic activity. Conversely, if homeowners use this equity to finance large purchases or investments that do not yield returns, it might contribute to economic instability. The article also notes that while HELOCs can provide liquidity, the variable interest rates associated with them could become burdensome if rates rise, potentially leading to financial strain for borrowers. This scenario could exacerbate economic downturns if widespread, as it might coincide with a softening housing market, where declining home values could leave homeowners with negative equity.

Read the Full Insider Article at:
[ https://www.businessinsider.com/home-equity-heloc-housing-market-consumer-spending-recession-real-estate-2025-3 ]