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.

Originations

Home equity lending surges as consumers consolidate debt

The latest quarterly numbers from TransUnion show both closed end products and HELOCs rose over the course of the past year as mortgage originations fell.

By Bonnie Sinnock

February 1
Reverse mortgages

HECMs saw greater pullbacks in endorsements at end of 2022

After volumes peaked at their highest in over a decade in March, the reverse mortgage market ended the year with a bankruptcy and merger involving its largest companies.

By Spencer Lee

January 20
Originations

Banks better equipped than nonbanks to navigate this downturn

Investor whims and secondary market conditions make any pivot away from fixed-term products a riskier proposition for nonbanks, mortgage advisory group Stratmor said.

By Spencer Lee

December 21
Housing markets

Home equity gains are slowing

Borrowers gained an average of $34,300 in home equity since the third quarter of last year, but that's almost half the amount of growth recorded over the summer.

By Andrew Martinez

December 9
Home equity loans

6 home equity product related developments in the mortgage industry

Lenders are focusing on these loans to drive new business as the refinancing market continues to decline in the face of higher interest rates.

By Courtney Hoff Dockerty

November 14
Earnings

LoanDepot hypes HELOC, cost-cutting amid 9-figure loss

The company has incurred a combined $91.8 million in expenses in the past two quarters related to its massive cost-cutting plan, which included the layoff of thousands of professionals.

By Andrew Martinez

November 9
Home equity loans

HELOC hesitancy among consumers is real, a new survey finds

While loan consolidation is a priority for many who consider home-equity products, a third of those with other debts aren't comfortable taking out a second lien on their homes.

By Spencer Lee

October 14

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.