Home equity loans and HELOCs

Home equity loans and lines of credit are playing a growing role in the mortgage industry as borrowers look to tap into rising home values amid high interest rates. These products introduce new considerations that can impact lending strategies, portfolio performance, and risk management for financial institutions. As a mortgage professional, it's critical to understand how evolving consumer behavior, the rate environment and broader economic conditions are shaping demand for home equity products. Explore our in-depth coverage, including news, expert analysis, and market research, to stay informed on the latest developments and insights around home equity lending.

Loan Think Are banks ready for an uptick in HELOC applications?

Recent research into customer preferences regarding home equity lending reveals that banks need to better engage with their customers to understand their needs and expectations, and then guide them to optimized HELOC product offerings that precisely meet their needs.

November 15

Rutger van Faassen

Nomis Solutions
Reverse mortgages

As FHA reserves dwindle, so do odds of premium cut

The Federal Housing Administration was battered by losses this year from reverse mortgages, casting doubt on whether the agency will adopt an Obama-era proposal to reduce mortgage insurance premiums.

By Kate Berry

November 15
Mortgages

Capital One to exit mortgage originations, cut 1,100 jobs

Capital One Financial will stop originating mortgage and home-equity loans after competition made it difficult for the businesses to be profitable.

November 7
Home equity loans

Home equity beckons, but few ready to embrace it

Home equity lines could double over the next six years. Some banks are actively pursuing the consumer credit opportunity, whereas many still feel stung by the housing crisis, unimpressed by home equity’s comeback so far or fearful of nonbank competition and fraud.

By Laura Alix

October 30
Home equity loans

Texas credit unions backing HELOC, prize-linked savings ballot provisions

One of the biggest challenges surrounding the ballot initiatives is voter turnout, which is often just 10 percent of registered voters in elections the year after a presidential contest.

By Michael Bartlett

October 27
Underwriting

HELOCs could be making a comeback

The forecast for total originations of home equity lines of credit over the next five years is almost twice as high as the five-year total through 2017.

By Bonnie Sinnock

October 24
Consumer lending

Delinquencies remain low even as household debt climbs

At 1.56%, the delinquency rate on consumer loans remains well below historic averages, the American Bankers Association said Thursday.

By Laura Alix

October 5

Banks on deck for quarterly earnings amid tariffs mayhem: Live coverage

The first three months of the year coincide with the start of President Donald Trump's second term in office. Investors are likely to be more interested in banks' outlooks amid swings in tariff policy than the first-quarter results.

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The latest American Banker research and discussion on Tariffs

Frequently Asked Questions:

What proactive measures are banks using to mitigate the impact of tariffs?

Trade finance services and corporate client advisory on supply chain adjustments allow banks to lessen the impact of tariffs. For example, Citizens Financial’s trade finance unit helped companies accelerate inventory purchases and use letters of credit to secure transactions ahead of new duties. Many banks are also using hedging strategies and leveraging deregulation windfalls to address higher costs.

How should banks recalibrate interest rate forecasting and monetary policy expectations amid tariff-induced economic disruptions?

Banks can incorporate tariff-driven inflation and growth scenarios into their interest rate models and maintain flexibility in policy outlooks. Institutions are closely tracking Federal Reserve signals in this volatile trade environment, as tariffs can both slow growth and raise prices. This can put the Fed “in a quandary,” requiring banks to update their asset-liability strategies to account for potential rate cuts or even hikes.

What advanced compliance and technology strategies are banks using to optimize cross-border payments and trade finance?

Banks are deploying sophisticated payment analytics and real-time treasury tools to manage cross-border flows amid shifting tariffs. BNY Mellon, for example, notes clients are using predictive cash-flow analytics to navigate uncertainty. Institutions can also improve compliance automation by integrating systems for instant sanctions/tariff list updates. This can ensure cross-border transactions meet changing trade rules.

What are best practices in risk modeling and scenario analysis for banks to navigate tariff-related risks?

Leading banks can look to bolster scenario analysis capabilities to account for tariff shocks. Banks can run stress tests on portfolios with heavy exposure to tariff-impacted sectors such as automotive manufacturing and agriculture as well as model multiple trade war outcomes. Analysts also advise enhancing “playbooks” for varied economic scenarios and properly pricing new loans for added risk. For example, this could mean using forward-looking models to adjust credit loss provisions and capital plans.

How can banks prepare for long-term industry trends driven by tariffs and trade uncertainty?

Banks can prepare through incorporating trade policy shifts into growth investments as well as technology investments. This includes diversifying supply chain financing, investing in local manufacturing projects, and strengthening presence in resilient markets. Industry leaders like JPMorgan’s Jamie Dimon are watching the “restructuring of trade and tariffs” as an inflationary force shaping future strategy.

Which banking operational units should banks prioritize for tariff exposure assessments?

Commercial lending divisions, including those that finance manufacturers, agriculture, and exporters are a priority. These units will most directly face clients impacted by tariffs. Other units to review exposure risks include specialized trade finance and supply chain finance.

How is artificial intelligence (AI) helping banks address tariff-related challenges?

AI enables banks to respond faster and more efficiently to tariffs. Machine learning models can recalibrate pricing and supply chain finance strategies as trade policies shift. Generative AI tools can shorten the time needed to update payment systems for new tariff rules update payment systems for new tariff rules. AI-enabled platforms can make compliance a proactive function by automating real-time screening of transactions against changing trade restrictions.