From Home Equity Lending: 2015 vs. 2025 – a Decade of Evolution, Déjà vu or Stagflation?, a Curinos webinar featuring Rich Martin, SVP, Retail Lending, Ken Flaherty, senior manager, Retail Lending, and Kinley Hicks, senior associate, Retail Lending.
In home equity lending, everything old is new again. Or is it? That depends on the lens being used to peer into the past. In this webinar, Curinos experts traced trends facing the industry over the past decade and drew several conclusions—some familiar, some evolving, some disturbing, some encouraging. They examined current economic conditions, the competitive landscape, originations and operations, portfolio performance and a glimpse into the next ten years. Here’s what they found:
1. Because of the lock-in effect, the opportunity remains ripe for home equity (HE) lending.
More than two-thirds of first-mortgage holders nationwide are at a rate of less than 4.5%. That means a sizable percentage of them are more than happy to stay put—and maybe undertake home improvements—rather than moving and taking on a first mortgage at today’s rates of around 7%. In fact, Curinos estimates that in a realistic scenario (illustrated below), first-mortgage rates would need to fall to below 4.5% to make a refi cash-out more attractive than supplementing a first mortgage with a home equity line of credit (HELOC), even at today’s rate of about 8%. The example below highlights how favorable the climate continues to be for HELOCs.
Source: LendersBenchmark FM Originations, CoreLogic
2. Not déjà vu: Depository lenders account for 80% of all HE originations, down from virtually 100% a decade ago.
Eighty percent market share may sound pretty good, but the statistic is specious. Fact is that over the past decade depositories have given away fully 20% of their originations—to fintechs, independent mortgage brokers and other non-depository lenders, and home equity investment (HEI) providers. The 15% share that non-depository lenders enjoy has ballooned from 2% only five years ago, and every indication is that the trend is only accelerating. It’s not that these competitors are selling different products, they’re not, and sometimes they’re even adding fees. But they’re marketing aggressively and taking friction—and, more important, time—out of the application and approval processes. In so doing, their business models have challenged the status quo of how depositories acquire new customers, which has traditionally included their reliance on cross-selling their existing customers.
2024 Home Equity Market Distribution
Source: Curinos Lendersbenchmark HE Originations; Curinos Market Research
3. Another evolution: Nearly one-quarter of all HELOC originations are from digital sources, close to a fivefold increase since 2015.
The burgeoning digital volume has come mostly at the expense of branches, which have seen their share of originations fall from nearly 80% to just over half in just ten years. This is consistent with the migration of originations from depository lenders to non-traditionals and HEIs. Considering all the moving parts in the application and approval process, the relative ease that digital brings to applicants will only continue. Curinos has also found that there’s a strong correlation between speed and need. Quicker approval and funding generally result in greater line usage and higher lines.
HELOC Booked Unit Distribution by Subchannel
Source: Curinos Home Equity LendersBenchmark Originations
4. Positive déjà vu: After normalizing in 2016 from the Great Financial Crisis, HELOC delinquency trends have been mostly flat since 2022.
Except for marginal increases in the <700 range, HELOC delinquencies have held mostly steady. This represents déjà vu from almost a decade ago that we can all celebrate. Even with the major disruption of a pandemic and the spike in inflation that ensued, HELOC holders have made good on their obligations, and there’s no reason to think they won’t continue to going forward. When a home’s equity is at stake—and there’s more at stake than ever—homeowners have been and are highly motivated to stay current, and they’re likely to stay that way.
HELOC Delinquency Trends by Credit
Score Tier and Reporting Year
Source: Curinos Home Equity LendersBenchmark Portfolio
5. Cautionary tale: We’ve seen this movie before on the liability side of the balance sheet.
Will HE lending products continue to be mostly cross-sold, or will they become the gateway to primacy? The answer may lie in lessons that can be gathered from what’s happened to deposits over the same period of time. Today, non-traditional depositories—direct banks and neobanks—account for more than four out of every ten new primary deposit accounts. In 2019, the number was only three in ten. If history is any guide, non-depository lenders could similarly be turning HE lines and loans into customer-acquisition products. If so, traditional depository lenders would be well advised to protect their turf by meeting many of their customers where they already are: using digital to smooth out and speed up the process.
Year Primary FI Account Opened
by Primary Bank Type
Source: Curinos Deposit Analytics; Shopper Study
