The loans tend to be used to buy more stocks. That has Fed chief Alan Greenspan mildly concerned. When stocks fall, margined portfolios fall faster. If it turns out that rising home values are being mortgaged to prop up stocks, a crack in the stock market could hit home values hard. No one seems to know the extent to which Americans are betting their houses on the stock market.
Economists contend that people are more likely taking cash out of stocks and buying houses.
Yet it would hardly be surprising if the reverse were true. They're easy to tap and fully tax deductible regardless of investment income. That last point is big because hot stocks today don't throw off dividend income. You may be better off in the short run tapping your home-equity line than margining your brokerage account. I'm against leveraged investing for most people.