Although most financial planners advise against home owners using home-equity loans to fund short-term expenses, like vacations, it seems that U.S. home owners between the ages of 30 and 34 who have owned a home for three years or more are doing exactly that.

More than half of those home owners have taken out a home-equity loan, according to results of a Discover Home Equity Loans survey, and, as MarketWatch editor Amy Hoak reports, industry professionals are simultaneously surprised and unperturbed.

“It mystifies me that they’re taking out additional debt,” said Jackson Mueller, deputy director of the FinTech Program for the Center for Financial Markets at the Milken Institute, a nonpartisan think tank that aims to increase global prosperity. “But it doesn’t really surprise me that they’re using alternative financing to fund certain things.”

Borrowing against a home could be better than using credit cards in some ways, though. The average interest rate on a home-equity loan was 4.88% for the week ending Aug. 17, according to; the average rate on a home-equity line of credit was 4.75%. The average credit-card rate was 16.1%. Interest on home-equity loans is also tax deductible, said TJ Freeborn, spokeswoman for Discover Home Equity Loans.

Read more >