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Articles by Ken Flaherty
Home Equity Growth Even Better Than (We) Expected
In the first half, home equity originations grew 4% year over year, an improvement from Curinos’ H1-26 forecast of 0% to 3%. It’s evident that homeowners are still turning to equity-based borrowing even as consumers cope with ongoing volatility and uncertainty. HELOC originations led the charge, continuing to benefit from homeowners’ need for flexible access to credit and the ongoing lock-in effect created by low-rate first mortgages.
Home Equity Growth Slows, But Fundamentals Remain Strong
Last year, Curinos projected continued growth, if moderate, for the home equity market heading into 2026. While the fundamentals that supported that outlook remain largely intact, evolving economic conditions and changing mortgage market dynamics are likely to soften demand for the remainder of the year. Curinos now expects home equity originations to grow between 0% and 3% during the first half of the year, followed by 1% to 4% growth in the second half, resulting in 0% to 3% growth for the year.
Home Equity’s Next Chapter
As 2025 enters its final stretch, the home equity market continues to lean towards the upside. Curinos’ Home Equity data, captured directly from lenders, show originations up 18% year over year through Q3 2025, reflecting a powerful mix of consumer demand and lender adaptability (see chart). Looking ahead, Curinos projects an additional 4% growth in 2026, fueled by anticipated rate relief and rising consumer confidence.
Good News: Strong Home Equity Growth Ahead
Curinos now forecasts a robust 14–17% increase in home equity originations for 2025 compared with 2024, fueled in part by an exceptional first semester, which saw ~18% annualized growth. The updated outlook, based on Curinos’ proprietary market data, reflects steady economic conditions and healthy borrower sentiment (see table).
The Outlook for Home Equity Lending
Curinos is projecting a 6-10% increase in home equity originations this year compared with 2024, driven largely by an impressive 16% year-over-year growth rate in Q1. That’s based on our proprietary data, which reflect the industry’s cautious optimism and indicate a lessening of economic volatility as the year progresses.
Home Equity Lending 2015 vs. 2025-5 Takeaways
From Home Equity Lending: 2015 vs. 2025 – a Decade of Evolution, Déjà vu or Stagflation?, a Curinos webinar featuring Rich Martin, SVP, Retail Lending, Ken Flaherty, senior manager, Retail Lending, and Kinley Hicks, senior associate, Retail Lending. In home equity lending, everything old is new again. Or is it? That depends on the lens being used to peer into the past.
Rates and Economic Outlook Spurring HELOC Growth
The demand for home equity lines of credit (HELOC) remained mostly lethargic throughout 2024, despite the positive economic tailwinds at its back such as increased homeowner equity and low unemployment. But thanks to the Fed’s series of rate cuts beginning in September, application growth rebounded in Q4 to its highest level in several years – even during what’s generally considered a nonseasonal quarter for home equity demand (see chart, left).
Fed Cuts Another 25 bp
As was widely expected in the markets, the FOMC cut the target range for the Federal Fund rate by 25 basis points to a range of 4.5% to 4.75%. Chair Powell reiterated sustained confidence that the economy remains on a path toward a long-term goal of 2% inflation despite a modest monthly uptick in the October CPE print. The committee also noted that, despite moving up modestly, the unemployment rate remains low.
Impact of Falling Rates on Consumer Lending – 5 Takeaways
From “Consumer Lending In Transition: The Impact of Falling Rates,” a Curinos webinar delivered October 17, 2024, featuring Rich Martin, SVP, Retail Lending; Ken Flaherty, senior manager, Retail Lending; and Kinley Hicks, senior associate, Retail Lending. Interest rates have begun their descent, and the demand for Consumer Lending products could be profound. Softening rates could also create a transition in the market, reducing interchangeability between Home Equity and unsecured.
The Fed Goes Big
The FOMC cut the Federal Funds target rate by a decisive 50 basis points to a new range of 4.75% to 5%. The dot plots in the summary of economic projections indicate an expectation, on the part of FOMC members, that rates will likely fall an additional 1.5%, or more, through 2025. With this turn in the rate cycle, we’re entering what may be, in many ways, uncharted territory.
Home Lending: How To Best Position For A Bounce-Back
Today’s low demand makes now a good time for lenders to align products, fees and pricing strategies to position themselves for a surge in demand and competition. Until mortgage volumes recover, lenders should look to areas of emerging demand, including first-time homebuyers and those with non-traditional income. High interest rates are making home equity-tapping products attractive, especially compared to alternatives such as credit cards and personal loans.
Home-Lending Update: How To Strive Till '25
Mortgage and home equity originations face the continuing challenges of higher rates and lower consumer confidence, both of which correlate highly to home-lending demand. But chasing greater mortgage volume, done largely through price, is a high-stakes gamble that only lenders with enough scale and the right cost structures can sustain. For HELOC providers looking to improve margin, it may be time to cut back excessive line sizes and focus more on balance growth.
Home Equity Is Positioned For A Rebound
Curinos’ Home Equity Forecast, the industry’s first, suggests that demand for home-equity products is poised for a dramatic upturn in the second half of 2024, driven in large measure by expectations of lower rates and growth in home ownership. In light of the expected rebound, now might be a good time for lenders to reconsider their stance on credit risk because the threat of higher collateral risk seems to have diminished.
More Mortgage Malaise, Higher Hopes For Home Equity
Curinos expects many of today’s mortgage market challenges – affordability, inventory, lack of demand – to persist in 2024, with a material recovery not likely until 2025. Curinos’ Home Equity Forecast, the industry’s first, suggests that demand for HE products is poised for a dramatic upturn in the second half of the year. Lenders should now reconsider their stance on credit risk – we see lower collateral risk, so more accessible credit could provide a competitive edge.
Consumer Lending in Transition: The Impact of Falling Rates
As interest rates begin their descent, what effect will there be on the demand for Consumer Lending products? Will softening rates create a transition in the market, reducing interchangeability between Home Equity and Unsecured Lending? The potential for turbulence in the lending space should motivate lenders to prepare today for tomorrow’s shifts in borrower demand, as well as building an understanding of how consumer behavior is key to navigating the road ahead.
Fed Pauses, But What Lies Ahead Is Less Clear
Today, the Fed announced a pause in rate hikes, leaving the benchmark Federal Funds rate unchanged at 5.00% — 5.25%, while leaving the door open for future rate increases. Following a series of rapid increases, the Fed has signaled less certainty about the path forward. Statements from FOMC members have offered multiple possibilities, from rate decreases as soon as the fourth quarter to continued aggressive increases.
Thinking Inside The Big Box
Lenders One is betting thinking inside the big box is its key to future success; happiness doesn’t outsmart intelligence; don’t get tripped up by sloppy data practices; and so much more.
Lenders One Sees A Future With WalMart
Starting in high school and continuing through his collegiate years, there were few opportunities for Justin Demola to engage in usual adolescent and student behavior like sleeping in or slacking off. Instead, during vacations and breaks, he was put to work in his uncle’s mortgage business, Walsh Securities/Equity Rewards, in Parsippany, N.J. “I was held hostage,” said the 48-year-old Demola, who now leads the mortgage cooperative Lenders One, when asked about his upbringing.
Is Fintech a Threat to Home Equity Business As We Know It?
Relationships are more like journeys than they are destinations. In romance and in business alike, staying connected and continuing the exchange of resources is an obvious choice when the needs of all parties are fulfilled. However, much like the relationship between traditional home equity lenders and borrowers, when one grows complacent as the other evolves, challenges arise, making other options appear more attractive.
Fed Plateau: Key Insights
The Fed again slowed the pace of rate increases, raising the target Fed Funds rate 25 basis points to 4.50%-4.75%. If inflation figures continue to show progress, markets are anticipating a plateau, with the Fed pausing rate hikes to examine the effectiveness of the increases to this point. That doesn’t mean it’s time to start celebrating. Historically, Fed rate plateaus have introduced their own set of challenges for the industry.
Preparing for Home Equity’s Return
Home-equity loans have taken a back seat in the mortgage industry in the last several years. Some big lenders stopped offering the product as low rates drove customers to refinancings and cash-out mortgages. And even fintechs were focused on other financial products. That may be all about to change. Higher rates will likely drive homeowners back to home-equity products for their cash needs and away from the refinancings that have been dominating the industry.
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