The total origination volume for open-ended home equity lines of credit (HELOCs) and closed-end home equity loans in 2023 were up 1.5% year-over-year while debt outstandings increased 8.3%, according to the Mortgage Bankers Association’s (MBA) 2024 Home Equity Lending Study.
Total originations of open-ended HELOCs and closed-end home equity loans increased to $2.13 billion per company in 2023, compared to $2.10 billion in 2022. The average HELOC commitment volume (total credit offered) was $1.8 billion per company in 2023, down from $1.9 billion in 2022. The average combined loan-to-value for funded HELOCs at closing inched up to 53% in 2023 from 51% in 2022, while the average FICO score fell to 760 in 2023, from 769 in 2022.
By known borrower usage, home renovations slowed to 56% of volume in 2023, from 65% in 2022, while debt consolidation grew to 33% of volume in 2023 from 25% in 2022.
“Home equity originations were relatively flat in 2023 compared to 2022,” said Marina Walsh, MBA’s vice president of industry analysis. “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. 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.”
;
