More Consumers Applying for Home Equity Lines of Credit


In a reflection of the recovering housing market, consumer demand for home equity lines of credit is surging, according to the Consumer Banker Association’s Home Equity Lending Committee.

As of March 15, HELOC originations have grown 36% over the year prior, the CBA found in market analysis performed in coordination with analytics firm Icon Advisory Group. HELOC applications grew 25% in 2014.

“With recovering home values and improving consumer confidence, we are seeing an increase in demand for HELOCs from qualified borrowers,” said Nancy Elkus, vice president and senior consumer lending product manager at Fifth Third Bank and chair of CBA’s Home Equity Lending Committee, in a news release. The results of the market analysis were first presented at CBA LIVE 2015.

Attractive interest rates have also contributed to the growth in demand, the study found. Borrowers seeking these lines of credit also have an improved profile with very low credit risk and strong equity positions, with a weighted average credit score of 777 and more than 85% of HELOC originations less than or equal to 80% combined loan to value ratio.

While originations are up, the position of the lien has been shifting. While traditionally most home equity originations have fallen in the second-lien position, first liens accounted for more than 45% of HELOC total origination dollars in 2014. This outpaced the growth of second-lien volume as well.

In following other trends in the housing market, HELOC demand grew the most in West (28%), followed by the Midwest (26%) and the South (24%).

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