Home equity lending sees big boost in Q2, data shows

Home equity lending jumped over 40% on an annual basis according to ATTOM Data Solutions

In spite of the tumult currently engulfing the traditional mortgage industry, home equity lending — specifically as it relates to Home Equity Lines of Credit (HELOCs) — are posting big gains according to new data from ATTOM Data Solutions.

While purchase loan activity showed a modest gain in Q1, the best performing category in Q2 2022 was home equity lending “by far,” according to an analysis released by ATTOM. HELOCs recorded an increase of 35% on a quarterly basis but rose 44% when compared to the same period in 2021 to 341,704.

“Borrowers looking to tap into their equity should know that HELOC activity has been particularly strong among credit unions and community banks, along with a small but growing number of depository banks,” said Rick Sharga, EVP of market intelligence at ATTOM. “While non-bank mortgage lenders may begin to more aggressively originate home equity loans, it’s not likely they’ll be active participants in the HELOC market.”

The increase in HELOC activity comes after a sustained period of reductions in volume, according to ATTOM’s data analysis.

“HELOC activity increased for the fourth time in five quarters after decreasing in each of the prior six quarters,” the analysis reads. “The $66.3 billion second-quarter 2022 volume of HELOC loans was up 29.4% from $51.2 billion in the first quarter of 2022 and 39.8% from $47.4 billion in the second quarter of last year, hitting the highest point in almost three years.”

In total, HELOCs comprised 14.3% of all loans in Q2 2022, according to ATTOM.

In comparison, reverse mortgage volume was also buoyed in Q2 2022 on the basis of its own business activity, however reverse mortgage uptake remains substantially lower than HELOC volume. The reverse mortgage industry endorsed 17,955 loans in Q2 2022 according to data shared on social media by Reverse Market Insight (RMI), a 3% increase over the same period in 2021.

However, even considering the gulf that exists between HELOCs and reverse mortgages, the resurgence of HELOC volume could be a potentially good sign for the reverse mortgage industry as recently explored on RMD with reverse mortgage professionals including John Lunde, president of RMI.

“I think it speaks to consumer interest in using home equity for their cash flow across the age spectrum as it continues to be the largest source of potential funds for most households,” Lunde told RMD this week. “The younger borrower might be using it as a way to avoid replacing a lower rate first lien mortgage, which isn’t a motivation for reverse for older clients, but the added motivation of not repaying principal and interest or qualifying for that monthly payment is a push in favor of reverse that forward doesn’t have.”

Read the analysis on HELOC data at ATTOM Data Solutions.

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