Home equity loans

The loans increased their share to more than 20% of home lending volume in the fourth quarter, compared to just 7% a year earlier.

Purchase and refinance mortgages continued their slide as total origination volume was $475.5 billion during the final months of 2022, down 56% from the end of 2021.

Lenders are seeking to capture homeowner interest amid higher living costs, but home values have collectively fallen from their record-high last summer.

Despite slowing originations, the shift to a purchase-oriented market contributed to growth, while outstanding HELOC amounts also surged to its largest in over a decade, the Federal Reserve Bank of New York found.

While reverse mortgages allow older homeowners the opportunity to draw on home equity with minimal risk, problems arising from flaws in program structure are causing headaches for borrowers and issuers alike, according to recent reports.

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.

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.

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

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.

In the face of a growing number in home-equity products, HECM endorsements dropped nationwide by over 43% on a monthly basis to its lowest point in more than two years.