The Mortgage Bankers Association’s (MBA) 2025 Home Equity Lending Study revealed sizable upticks in originations and outstanding debt among homeowners seeking to tap into their home’s equity last year.
Total originations of open-ended home equity lines of credit (HELOCs) and closed-end home equity loans saw a 7.2 percent jump in 2024 from the previous year while total HELOC and home equity loan outstanding debt grew 10.3 percent.
MBA Vice President of Industry Analysis Marina Walsh described a shift she has observed in homeowners’ reasons for applying for a HELOCs in an MBA press release describing the study results.
“With close to $35 trillion of homeowner equity in residential real estate and many homeowners locked into low-rate first mortgages, HELOCs and home equity loans have become the product of choice for many homeowners,” Walsh said in a press release. “Lenders in our study expect year-over-year growth of almost 10 percent for HELOC debt and 7 percent for home equity loan debt in 2025.”
Approximately 39 percent of borrowers cited debt consolidation as the reason for applying for a home equity loan in 2024, compared to 25 percent the previous two years. Meanwhile, HELOCs for home renovations dropped to 46 percent of all home equity loans, compared to 65 percent in 2022.
“While there are additional opportunities in this space for lenders, there are also challenges,” Walsh said. “For example, just 50 percent of home equity applications are closing, and turn times are averaging 39 days. Automated valuations and decisioning, integrations with mortgage platforms, and accessible self-service options are a few ways lenders intend to increase efficiency and reduce costs.”