As mortgage rates have eased, there has been a small uptick in buyers seeking mortgages and homeowners looking to refinance loans. But both key sectors, long the bread and butter for mortgage companies and brokers, remain at very low levels of activity.
The number of mortgages being taken out is down 38 percent from the same period last year, while refinance loans are just a shadow of what they were, off 85 percent from early December 2021, CNBC reports.
So, what’s a mortgage broker to do? Well, apparently more than a few brokers and mortgage lenders are pushing home equity lines of credit, or HELOCs, according to National Mortgage News.
With home prices surging, a number of major metro markets kicked off 2022 with increases in home equity loans of anywhere from 15 to 25 percent, some handy real estate data in the piece shows.
Philadelphia, San Jose, Los Angeles, and Miami have all seen increases of over 20 percent, while San Antonio is just shy of that mark.
That momentum continued through the second and third quarters of 2022.
Through the first six months of 2022, the number of HELOCs surged, rising 30 percent over the same period in 2021, USA Today reports.
HELOCs rose another 5 percent in the third quarter, according to Marketplace, the public radio business program.
And in a bid to drum up more business, some industry players have begun to roll out new home equity products, a group that includes Rocket Mortgage.
Rocket announced the launch of a home equity loan back in September, though the company does not do home equity lines of credit.
Estimates on the amount of home equity that homeowners could potentially tap into vary, but it could be as high as $20 trillion. That’s up from $12 trillion in 2012.
“Our goal is to consistently create financial products that help our clients achieve their goals,” said CEO Bob Walters, told National Mortgage News. “In the current market, short-term interest rates have risen sharply — making it much harder to pay off credit card debt.”
Still, the window for launching a new home equity loan or line of credit is not likely to stay open forever.
As slow sales start to moderate and then bring down prices as we head into the new year, home equity loans may start to lose their luster with homeowners.
Interested in getting a better handle on where the mortgage market is headed or finding new lending prospects?
The Warren Group has an array of data modules that can help with your mortgage market analysis, including our Loan Originator Module and Mortgage MarketShare Module. In addition, our Direct Marketing Lists can help you pinpoint prospects for HELOCs.
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