Americans are getting smarter when it comes to home equity borrowing: They’re doing less of it.

“People aren’t borrowing as much on their houses,” says David Wyss, chief economist for Standard & Poor’s.

The likely reasons: Banks aren’t making the loans and sinking home prices give homeowners less equity to borrow against.

In addition, consumers are finally realizing that borrowing against their home is a bad way to pay for that family vacation, says Wyss.

Including new loans and old balances, home equity loans and lines of credit have risen a consistent 20 percent each year since 2000, says Scott Hoyt, senior director of consumer economics for Moody’s

Though still increasing, “It’s now growing at 5 percent” annually, he says.

Why the drop?

“I think a lot of it is that they can’t,” says Hoyt. Between the lack of equity in many homes and tightening lending standards, American homeowners don’t have the options they had not long ago.

Among homeowners who refinanced last year (a pool of people with good credit and home equity), 56 percent cashed out at least some of the equity in their homes, according to numbers from Freddie Mac. But that’s down from 82 percent just one year earlier, says Hoyt.

And some say that American homeowners won’t be tapping their home equity piggy banks quite as hard this year. In 2006, homeowners took out a total of $640 billion, says Wyss, citing numbers from Freddie Mac. But in 2008, he predicts, “We’re looking at half that.”

Is your home equity debt a problem?