Home Equity Loan Research

Goals

To find the combined number of new originations of home equity loans (HEL) and home equity lines of credit (HELOC) in the U.S. during 2020. Specifically regarding the total amount of new loans issued, and not total outstanding debt.

Early Findings

Summary

  • Initial Research has shown that there is a lack of complete and credible data in the public domain, suggesting that it will be difficult to establish explicitly how many new originations there were in 2020.
  • Regarding Home Equity Loans (HEL) and Home Equity Lines Of Credit (HELOC), the majority of the available information and collected data was around outstanding debt, which is outside the scope of this request.
  • As a result, the information below shows examples of what is available and suggests next steps for developing the research path

What Information Was Available

i) Subscription based
  • There is information online which may provide the required information, however this is mostly only available via subscription services. The Mortgage Bankers Association (MBA) conduct an annual Home Equity Lending Study. The Spring 2020 edition, based on data from 2019, sources information from 29 member companies, including banks, community banks, credit unions, and independent mortgage companies. This group represented $62.3 billion in Home Equity Lending volume in 2019, but there is not enough information provided to determine what percentage of the total lending across the U.S. this forms. The report itself features HEL and HELOC total commitment volumes by new account, however it is only available by membership or subscription service.
  • Inside Mortgage Finance have industry data on HEL originations by quarter for U.S. lenders, via their subscription service.
ii) Available Data
  • Information from ATTOM Data Solutions revealed that in the fourth quarter of 2020, a total of 245,594 HELOCs were originated on residential properties. This was a 3% reduction from the previous quarter, and 22% from the same period in 2019. However, the value of HELs rose 5.3% from Q3 of 2020, to $54.76 billion. This represents the largest quarterly increase since the Q2 of 2019.
  • A 2017 online article from Housing Wire reported that forecasts for the number of new HELOC borrowers in 2017 was 1.4 million, with this figure rising to 1.6 million in 2018. This represented a 30% increase from the period of 2015 and 2016, where the volumes were 1.1 million and 1.2 million respectively. Further to this, approximately 10 million consumers are expected to take out a HELOC between 2018 and 2022, which is more than double the 4.8 million who took out HELOCs during the previous five-year period from 2012 to 2016.
  • The TransUnion HELOC Study also provided similar projections from the period of 2017 onward.
iii) Industry Information
  • During 2020, the industry was hit by banks and reducing HEL and HELOC lending. JP Morgan and Wells Fargo were two examples of a number of high profile lenders who stopped offering HELOCs due to the COVID-19 pandemic, which created a nationwide surge in unemployment, projections that U.S. home prices could decline substantially.

Research proposal:

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