When comparing originators that reported in 2021 to 2024, the total number of open-ended Home Equity Lines of Credit (HELOC) and closed-end home equity loan originations rose by 7.2%. The total amount of outstanding home equity and HELOC debt increased by 10.3%. The 2025 Home Equity Lending Study by the Mortgage Bankers Association (MBA) supports this in a new report.
The following are some conclusions drawn from MBA’s 2025 Home Equity Lending Study, which covered data up until December 31, 2024:
- Originators of closed-end home equity loans and open-ended Home Equity Lines of Credit (HELOCs) that reported throughout both periods saw an increase in total average volume from $2.14 billion in 2023 to $2.30 billion in 2024.
- Home improvements as a percentage of volume by known borrower usage decreased from an estimated 56% in 2023 and 65% in 2022 to 46% in 2024. From approximately 25% in 2022 and 33% in 2023, debt consolidation increased to 39% of volume in 2024.
- In 2024, roughly 47% of total 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, some 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.
YoY HELOC Debt Growth Projected to Jump This Year
“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,” said Marina Walsh, CMB, MBA’s VP of Industry Analysis. “Lenders in our study expect year-over-year growth of almost 10% for HELOC debt and 7% for home equity loan debt in 2025.”
The motivations behind using home equity are changing, according to Walsh. About 39% of borrowers in 2024 stated that they were seeking a home equity loan because they were trying to consolidate their debt, up from 25% two years earlier. The percentage of borrowers who cited home improvements as the cause for their use decreased from 65% in 2022 to 46% of the total.
“While there are additional opportunities in this space for lenders, there are also challenges,” Walsh said. “For example, just 50% 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.”
Additional Findings from the Report — National
- For repeat businesses, the average HELOC commitment volume (total credit extended) increased from $1.6 billion in 2023 to $1.7 billion in 2024.
- In 2024, the average FICO score increased from 760 in 2023 to 771. For funded HELOCs, the average combined loan-to-value (CLTV) at closing dropped from 53% in 2023 to 51% in 2024.
- In 2024, the average closings-to-applications pull-through for HELOC accounts was 49%, which was essentially unchanged from 48% in 2023.
- From the start of 2024 until the conclusion of the year, the weighted average HELOC outstandings in USD increased by 5.4%.
- When looking at rates across “origination vintage-year cohorts,” HELOC usage rates (dollar volume of outstandings compared to maximum credit capacity) decreased in 2024 despite larger outstandings. Utilization, for instance, was 42% in 2024 at nine months following origination, compared to 45% in 2023.
- For home equity accounts, the average closings-to-applications pull-through climbed from 39% in 2023 to 46% in 2024. From the start of the year to the end of 2024, the weighted average home equity outstandings in USD increased by 19.0%.
Additionally, the average amount of home equity loans originated by repeat businesses increased from $788 million in 2023 to $844 million in 2024. In 2024, the average FICO score increased from 742 in 2023 to 749. From 2023 to 2024, the average CLTV at closing stayed constant at 62%.
Overall, lenders anticipate that the amount of outstanding HELOC debt will rise by 9.8% in 2025 and 9.5% in 2026. Further, in 2025 and 2026, lenders project that the amount of outstanding home equity loan debt would rise by 6.6% and 4.1%, respectively.
Note: The MBA Home Equity Lending Study was carried out in the spring of 2025 for the purpose of lending and servicing closed-end home equity loans as well as open-ended HELOCs. Data gathered by MBA showed that, as of December 31, 2024, there were $24.8 billion in originations, $167.4 billion in maximum credit granted to borrowers, and $70.0 billion in outstanding borrowings. Benchmarking information such volume and product mixes, utilization rates, operational parameters like expenses, and growth projections are all included in the report.
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