'Serendipity always rewards the prepared' - Katori Hall.

A quote which Brad Rice of Amerifund Home Loans would most likely agree to.

In a recent podcast Brad shared his hindsight on how to find headroom for growth despite tough market conditions.

His philosophy - "To win in any market, look at the deal and not the decade." Perhaps a mantra that could help lenders scout for the right deal opportunities in today's market & hit serendipity by design !

One such emerging avenues of growth is HELOC mortgage.

Over the past few quarters, lenders are seeing an uptick in demand for HELOCs. According to Corelogic, HELOC activity grew to highest level since 2007, in the first two quarters of 2022 - totaling almost $130 billion.

Housing prices rocketed in a searing hot pandemic market - with the result that home owners today sit on a whopping $20 trillion worth of equity.

These home owners who were once considering cash out refinance during a sub 3% interest rate environment, are now staying put. Instead, they are looking to use their equity & putting money back into home renovations. This has opened up opportunities for lenders & banks to offer HELOC products to such home owners and breathe life into their origination business.

In a study by Citizen bank to measure homeowner sentiment around HELOC, it was seen that nearly 50% of respondents are likely to apply for a HELOC in next 3 years. The survey also found that younger generations are more likely to apply for a HELOC including 60% of Gen Z and 77% of Millennials.

With such trends, originators & servicers should consider ramping up their HELOC efforts. This includes not only providing an exciting range of HELOC products but also leveraging tech & high touch concierge approach to woo the younger generation.

Will we see a further uptick in demand for HELOCs in 2023? - only time will tell.

Nonetheless, lenders & servicers should remain prepared because - 'Serendipity always rewards the prepared.' 😊

Weekly Roundup

Mortgage Lending at a Three-Year Low, But HELOCs Are Up — www.investopedia.com

Spiking mortgage rates have cooled buyer excitement, which drove unprecedented price growth in 2021. Refinance enthusiasm has also cooled significantly. However, home equity line of credit (HELOC) originations have steadily grown over the past five quarters. As home prices soared in 2021, so did homeowner equity. While it doesn't make sense to refinance a sub-4% mortgage loan with existing rates, homeowners aren't leaving their equity where it is.

Instead of utilizing a cash-out refinance, homeowners are increasingly turning to HELOCs, which have seen increased originations in five out of the last six quarters. […]

Home equity line of credit and home equity loans: 'Right tool at the right time' — www.usatoday.com

Homeowners are sitting on an estimated $20 trillion worth of home equity, boosting the demand for home equity lines of credit and home equity loans.

HELOC activity grew to the highest level since the first half of 2007 in the first two quarters of 2022, according to CoreLogic.

During that period, lenders originated more than 807,000 new HELOCs, totaling almost $131 billion. Both HELOC counts and amounts have increased by 30% year-over-year in 2022.

A HELOC allows homeowners to borrow as much as 85% of the value of the home, and repay and redraw as needed […]

Citizens Survey Finds Young Homeowners Most Likely to Apply for HELOCs - MortgageOrb — mortgageorb.com

Roughly 77% of millennials are likely to apply for a HELOC within next three years, according to a survey recently conducted by Citizens Bank. As interest rates continue upward, home equity lines of credit (HELOCs) remain a popular tool for U.S. homeowners looking to access a flexible borrowing option. The new study, which measures homeowner […]

How Lenders Can Capitalize on a Resurgent Market for HELOCs - MortgageOrb — mortgageorb.com

American homeowners are spending more time at home and are looking to upgrade the spaces where they spend most of their time. Fortunately, many of them are “equity-rich” due to rising home prices, which have increased an average of 42% since the pandemic began in early 2020. A recent report shows that homeowners with mortgages […]

Dave Miller of Cenlar: Industry Outlook for Mortgage Servicing - MBA Newslink — newslink.mba.org

Originators are ramping up their HELOC efforts to stay competitive in the marketplace even with the scrutiny of an ever-changing regulatory environment. So financial institutions that are either originating loans, servicing loans, or doing both, need to think about how to offer these HELOCs while still maintaining the regulatory and compliance obligations. […]