The surge in home values is good news for homeowners looking to tap the equity in their homes to pay down debt or make big purchases, but consumer advocates worry that it may be setting the stage for a spike in loan defaults.

Consumers have plenty of reasons to tap into their home equity, such as paying off credit card debt or financing long-delayed home-improvement projects. Banks are happy to oblige, especially with rising interest rates suppressing demand for traditional mortgage refinancing.

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