Gearing Up For Home Equity In 2022

As of midyear, American homeowners had amassed $23.6 trillion in equity, according to the Federal Reserve. That’s the estimated value of their homes minus how much they owe on their mortgages.

“It’s astounding,” said Mike Fratantoni, chief economist with the Mortgage Bankers Association. “That’s up $3 trillion, just in the last year.”

To bring those numbers down to earth a bit, that’s an average gain of more than $51,000 per homeowner household, according to CoreLogic.

Homeowner equity has more than doubled over the past decade and become a crucial buffer for many weathering the challenges of the pandemic,” said Frank Martell, president and CEO of CoreLogic. “These gains have become an important financial tool and boosted consumer confidence in the U.S. housing market, especially for older homeowners and baby boomers who’ve experienced years of price appreciation.”

“The biggest trend that I’m seeing is that 2022 will be the biggest year for home equity accounts opened in the history of the mortgage market,” said Jeff Taylor, managing partner at mortgage processor and risk compliance consulting firm Digital Risk.

Home equity lines of credit, or HELOCs, and junior lien home equity loans will “come back into vogue” with more competition in the space, said Dale Baker, president of home lending at KeyBank.

“If a client already has 2.5% on their mortgage, and they need to borrow $100,000, do you refinance the whole thing at 3.5% or 4%? Or do you just go get a home equity loan or home equity line of credit and leave your 2.5% alone over the last several years?” he said.

While these market conditions point to strong demand for Home Equity Loans, lenders must also understand the changing expectations of borrowers in today’s market. “From a borrower’s perspective, the pandemic has accelerated the demand for a consistent, digital-first borrowing experience,” said Joe Tyrrell, president of ICE Mortgage Technology.

Borrowers are looking for a simple and easy way to get instant feedback on a home value, available home equity, and instant loan decision while applying for a Home Equity Line of Credit.

Lenders that have been able to deliver this to borrowers through the FirstClose One platform have seen a:

• 35% increase in online applications

• 25% increase in pull through

• 30% reduction in turn time (app to funding)

This dramatically improves the borrower experience while significantly reducing turn times.

“We have been able to reduce our turn times from 30-35 days down to 5 days using the FirstClose ONE Platform, stated David Brand, Senior Vice President of Lending Operations at Sharonview Federal Credit Union.

To learn more about how FirstClose can help you transform your home equity lending, click here to speak with a FirstClose specialist today.