Opportunity Lurks as HELOC Production Rises

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10 · 09 · 14

It’s been five years since the origination of home-equity lines of credit has been this high, and opportunity may be lurking in the sector.

During the 12 months ended June 2014, U.S. loan originators closed 797,865 HELOCs. Volume climbed 21 percent from a year earlier.

In fact, more HELOCs were closed in the latest 12-month period was than during any comparable period since 2009.

The findings were discussed in RealtyTrac’s first-ever U.S. Home Equity Line of Credit Trends Report.

Still, activity was nowhere near the 3.3 million HELOCs closed in the 12 months ended June 2006.

RealtyTrac said that HELOCs accounted for 15.4 percent of all loan originations during the eight months ended Aug. 31.

Using economic data from Fannie Mae, Freddie Mac and the Mortgage Bankers Association, Mortgage Daily estimates that total residential originations were around $739 billion during the first eight months of 2014 — putting HELOC production at around $114 billion.

RealtyTrac noted that the latest HELOC share was the highest since 2008.

“The rise in HELOCs also reflects a natural evolution for a lending industry looking for products they can offer to homeowners who have already refinanced their first position loan into a low fixed rate,” RealtyTrac Vice President Daren Blomquist said in the report. “A HELOC enables homeowners to leverage additional equity they may have gained since refinancing while still preserving the rock-bottom interest rate on their first position loan.”

But HELOC share has plummeted from nearly a quarter in 2005.

The New York metropolitan statistical area had more HELOCs closed during the latest 12-month period than any other top-50 MSA.

No. 2 was Los Angeles, followed by Chicago, Dallas and Philadelphia.


Mortgage Daily Staff


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