Total originations of open-ended home equity lines of credit (HELOCs) and closed-end home equity loans increased about 7.2% in 2024 compared with 2023, according to the Mortgage Bankers Association’s (MBA) 2025 Home Equity Lending Study.
The MBA notes that the lenders that opted to report data for 2024 are not necessarily the same lenders that reported data for the previous year.
Total HELOC and home equity loan debt outstanding grew about 10.3% in 2024, the MBA says.
“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,” says Marina Walsh, vice president of industry analysis for the MBA, in a statement. “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.”
Walsh notes that the reasons for tapping home equity are shifting. In 2024, approximately 39% of borrowers cited debt consolidation as the reason for applying for a home equity loan, compared to 25% two years prior. Those borrowers who indicated home renovations as their reason for usage dropped to 46% of volume, compared to 65% in 2022.
“While there are additional opportunities in this space for lenders, there are also challenges,” Walsh says. “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.”
Despite higher outstandings, HELOC utilization rates (dollar volume of outstandings compared to maximum credit facility) declined in 2024 when examining the rates across origination vintage-year cohorts. For example, at nine months from origination, utilization was 42% in 2024 compared to 45% in 2023, the MBA says.
Lenders expect HELOC debt outstanding to increase 9.8% in 2025 and 9.5% in 2026 and home equity loan debt outstanding to increase by 6.6% in 2025 and 4.1% in 2026.
According to the report, in 2024 47% of total HELOC/equity loan originations were subject to an automated valuation model (AVM) and 26% had a desktop valuation (DV), with most entailing either an exterior/drive-by inspection or no inspection at all.
Conversely, 24% of originations required a full appraisal with the majority entailing both interior and exterior inspection. The remaining 3% of originations used a different valuation method.
Photo: Alexander Grey