Study Finds Widespread Growth in Home Equity Originations
Home equity lending continues to grow, with both outstanding loans and collective credit limits exceeding $1 trillion last year, a new report found.
The report from Home Equity Lending News found that credit scores moved higher, bond issuance surged and providers of equity-sharing products raised billions of dollars last year, even as they faced growing state regulations.
Home equity lines of credit accounted for a larger share of lending activity last year, with collective credit limits surpassing $1 trillion. Bank of America Corp., Rocket Mortgage LLC and Figure Lending LLC remained among the most prominent participants, while financial services giant JPMorgan Chase & Co. re-entered the market and younger homeowners increasingly emerged as more fertile HELOC prospects.
The report said average credit scores for HELOC borrowers remained significantly stronger than for closed-end second lien borrowers, though both improved last year. Combined loan-to-value ratios on securitized closed-end second mortgage loans slipped even as HELOC CLTV ratios inched higher.
“Even as annual home-equity bond issuance continued to surge, volume remained subdued compared to pre-crisis levels,” the report said. “Billions of dollars in capital transactions were concentrated in equity-sharing companies. Figure (Lending LLC) completed an initial public offering, while Rocket Cos. closed on its acquisition of Mr. Cooper Group.”
Interest rates on HELOCs fell twice as much last year as on closed-end second lien rates, widening the spread between the two products by 40 basis points, while similar dynamics played out with weighted-average coupons on residential mortgage-backed securities transactions featuring home-equity collateral. Truist Bank maintained the highest home-equity portfolio yield among banks, the report said.
Outstanding home-equity lending products surpassed the $1 trillion mark in 2025, with banks losing share to mortgage companies, the report noted. BofA remained the single biggest investor in home-equity products.
“While the outlook for home-equity originations remains broadly strong, variables such as interest rates and the war in Iran will influence the outcome, with some of the greatest opportunity appearing to lie in equity-sharing originations as optimism among originators carries over to capital markets participants,” the report said.
FirstClose, Austin, Texas, and Midwest Loan Services, Hancock, Mich., sponsored the study.
