Originations of open-ended Home Equity Lines of Credit (HELOCs) and closed-end home equity loans increased by 1.5 percent last year, according to the Mortgage Bankers Association’s (MBA) 2024 Home Equity Lending Study.
Specifically, total originations of open-ended Home Equity Lines of Credit (HELOCs) and closed-end home equity loans increased to $2.13 billion per company last year, from $2.10 billion in 2022.
“Home equity originations were relatively flat in 2023 compared to 2022,” Marina Walsh, CMB, MBA’s vice president of industry analysis, said. “Even with evidence of easing credit availability, with originations activity moving to lower FICO credit scores, higher combined loan-to-value ratios, the closings to applications pull-through rate dropped, indicating that home equity lenders were doing more work for fewer loans.”
However, it also found that debt outstandings increased 8.3 percent.
“Despite the tepid volume growth in 2023, our study shows an uptick in home equity debt outstanding. The elevated mortgage rate environment slowed servicing runoff, and utilization rates also increased. Given the substantial amount of accumulated equity in real estate, there is still untapped potential for home equity lending for lenders and borrowers,” Walsh said.
Select findings from MBA’s 2024 Home Equity Lending Study (covering data through December 31, 2023) include:
The report also revealed that home renovations slowed to 56 percent of volume in 2023, from 65 percent in 2022, while debt consolidation grew to 33 percent of volume in 2023, from 25 percent in 2022.
Further, average HELOC commitment volume, which is total credit offered, was $1.8 billion per company in 2023, down from $1.9 billion in 2022. In addition, the average FICO score fell to 760 in 2023, from 769 in 2022, while the average combined loan-to-value (CLTV) for funded HELOCs at closing increased to 53 percent in 2023 from 51 percent in 2022.
Also, the average home equity loan originations were $657 million per company in 2023, up from $428 million in 2022.
MBA’s Home Equity Lending Study for lending and servicing open-ended HELOCs and closed-end home equity loans was conducted in the spring of 2024.