January 9, 2023

The Untapped Potential of Home Equity Lending

The pandemic has affected nearly every industry in some way or another, and the housing and mortgage market is no different. Mortgage rates reached historic lows, technology paved the way to keep work moving, and many potential buyers shifted to prioritize “home office space” on their wish lists.

But as the industry begins to stabilize, new trends are emerging that lenders should be aware of, including the return of home equity loans and HELOCs. Here are just three of the reasons why now is the time to take advantage of this market.

Increased Mortgage Rates, Decreased Refinancing

On  December 31st, 2021, the average 30-year fixed  mortgage rate was 3.367%.[1] Because of these low rates, cash-out refinancing made a lot of sense for homeowners looking  to tap into their home’s equity. In fact, nearly one-fourth of all homeowners with a mortgage benefited from refinancing in 2021.[2]

Fast forward to a year later when the average 30-year fixed mortgage rate has doubled to a whopping 6.74%.[3] Because of this, many homeowners are  searching for new ways to tap into their home’s equity. Home equity loans and HELOCs provide a solution for those seeking to access the equity in their homes without bumping up their interest rates.

Historically High Home Costs

Over the past few years, we’ve seen average home prices reach historic highs. The median home sale price in 2022 was $386,300—up 10.2% from 2021, and the highest on record according to data from the National Association of Realtors.[4] For homeowners, the rising values mean a boost in their tappable equity, which they can take advantage of through home equity loans and HELOCs.

In addition, many homeowners who previously considered moving are now rethinking. Reinvesting and renovating a current home suddenly seems much more appealing than buying a new property at a high price and high interest rate.

Lower Inventory of Available Homes

Finally, the low supply of available homes is also causing many homeowners to make the most of their current property.[5] Rather than getting into a bidding war and potentially overspending, many Americans are opting to remodel their current home instead. According to Harvard research, the annual spending on home improvements and repairs has consistently grown since 2020 and is expected to reach nearly $485 billion in 2023.[6] Home equity loans and HELOCs give homeowners the cash they need to complete these projects.

Say Hello to HELOC with Radian and homegenius

With all these factors at play, there’s never been a better time to help your clients explore their options through home equity lending. Discover the power of our all-in-one suite of solutions to get started.

Across Radian and homegenius, we offer services ranging from valuations and property condition reports to seamless title workflows. Because everything you need is in one place and backed by industry-leading technology, you’ll save time, money, and the hassle of juggling multiple systems.