The demand for home equity lines of credit (HELOC) remained mostly lethargic throughout 2024, despite the positive economic tailwinds at its back such as increased homeowner equity and low unemployment. But thanks to the Fed’s series of rate cuts beginning in September, application growth rebounded in Q4 to its highest level in several years – even during what’s generally considered a nonseasonal quarter for home equity demand (see chart, left).
The improvement to rates positively affected both new and existing HELOC borrowers. Applications were up 15% from Q3 as the weighted-average HELOC rate decreased by ~80 bp, and utilization of existing lines improved, in both new and older vintages, which was somewhat surprising (see chart, right). Typically, older HELOC vintages reach peak utilization levels at month-on-book 12. But the 2022 and 2023 vintages, now nearly three years on the books, also showed improved utilization, providing further evidence of borrower rate and payment sensitivity to the elevated rate environment.
Because of the projected rate outlook and supporting economic factors, Curinos expects home equity demand and utilization will continue to improve throughout 2025. Our latest National Home Equity Forecast projects a 15 to 20% annualized growth rate, signaling that homeowners are likely to take advantage of these favorable conditions to meet their financing needs.
Recent Prime Rate actions prompted a near-immediate improvement to both HELOC application volume and usage.
Source: LendersBenchmark HE Originations & Portfolio, New York Fed Economic Statistics (debt levels), CoreLogic (tappable equity)
