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Thursday, December 6, 2007

Home equity dips; falling home prices a factor

December 6 2007
Federal Reserve reports that owners' home equity drops to barely above 50 percent, falling home prices are a factor. The amount of equity homeowners hold in their homes slipped in the third quarter to just above 50 percent, according to a report from the Federal Reserve Thursday. Home equity has steadily decreased even as home prices jumped earlier this decade due to a surge in cash-out refinances, home equity loans and lines of credit and an increase in 100 percent or more home financing. This decline could curb retail spending as homeowners stop tapping home equity and, instead, save money.

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