Home Equity Loans (HELOANs)

Home Equity Loans (HELOANs) are a key growth product. As a closed-end, fixed rate second mortgage, it addresses the issues of decreased refinance volume and record high home equity. Lenders are adjusting HELOAN offerings to meet consumer demand such as increasing limits, adding 30-year terms, and securitizing billions in volume. The market is seeing innovation from both traditional banks and fintech companies as HELOAN growth continues.

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Frequently Asked Questions:

Why are home equity loans growing faster than HELOCs?

HELOANs outpaced HELOCs by 13% in origination growth in late 2024, showing how borrowers value the certainty of a fixed rate with a currently volatile rate environment.

What type of lenders are dominating the HELOAN market?

Traditional banks still hold the largest portfolios. However, in recent years, top home equity lenders include nonbank companies like Rocket Mortgage and UWM. Nonbank and fintechs have grown their market share through product innovation.

How are lenders improving HELOAN products to attract more borrowers?

Institutions and nonbanks are both addressing broker demand by expanding limits and terms. For example, Rocket Mortgage expanded its HELOAN limits and terms to offer 15- and 30-year options up to $500,000. These improvements make products more attractive to borrowers with a high amount of equity.

Are fintech lenders expanding access to home equity loans?

Yes. Button Finance raised $5 million to grow AI-driven underwriting and offer HELOANs to non-traditional borrowers, including those with complex income profiles.

What are alternatives to HELOANs and HELOCS?

For borrowers with a high amount of equity, shared equity deals are emerging as loan alternatives, though overall volume remains low in comparison.