More stories today of banks canceling HELOC (lines of credit) on people. Chase is the newest "villain." Maybe this will put an end to homeowners' using their houses as piggy banks. Economists seem to think that a change in housing prices has a 3.75 to 7 percent effect on consumer spending in either direction. So at the low end, you can expect around $135 billion less in consumer spending. In the past, people were using their homes as ATM machines with bedrooms attached. In 2006, Americans took out $350 billion from their homes in home-equity loans or second mortgages, and consumer debt is now $13.5 trillion. With tightening credit, that trend is nearing an end.
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