There should be less restrictive HELOCs which base the high price off of average appreciation over several decades (more conservative estimate) but let you spend it on whatever you want and then HELOCs which take whatever the appraiser says but requires oversight so that you invest in something that will actually improve your financial situation (home improvement, pay off higher interest student loan debt, etc).
Or more generally, something that keeps people from at least directly using equity to buy junk that only depreciates in value.
It’s obvious that the consequences of unbridled freedom of credit for the individual cannot be limited to the individual. When the economy tanks, it affects even those who do not abuse credit and make smart financial decisions. Reasonable limitations should be put in place and more oversight is definitely needed. While I’m somewhat happy my home value is going up, I’m actually more worried about another bubble developing in this more-demand-than-inventory environment. I’d rather have slower growth of my home value and economic stability over the long term.
I’m tired of this attitude that short term gains are worth destroying long term viability. It destroys households, businesses and seriously threatens our economy.
