Home Equity Lending Continues to Grow, Especially at Credit Unions

“With close to $35 trillion of homeowner equity in residential real estate and many homeowners locked into low-rate first mortgages, HELOCs and home equity loans have become the product of choice for many homeowners,” Marina Walsh, the MBA’s vice president of industry analysis, said. “Lenders in our study expect year-over-year growth of almost 10% for HELOC debt and 7% for home equity loan debt in 2025.”

Many existing homeowners benefitted from the low interest rates in 2020-2021 and refinanced into lower monthly mortgage payments.

The MBA said these homeowners have also benefited from over a decade of house price growth. And while home equity borrowing has been inching up, homeowners have borrowed less than 2% of their accumulated $34.5 trillion in equity.

The MBA’s sample included home equity lines of credit and loans that were both second- and first-lien among their surveyed lenders.

CU Times looked at Home Mortgage Disclosure Act (HMDA) data for the 34 credit unions, which produced $21.6 billion in second- and first-lien home equity lines of credit and second-lien closed-end home equity loans in 2024, or $636 million per lender.

HMDA data for those three categories showed the biggest portion among the 34 credit unions was second-lien HELOCs, which accounted for about two-thirds of the number and value of originations in both 2023 and 2024.

Here’s the break-down for the credit union sample:

• The number of HELOCs fell 1% to 128,362 in 2024, while their value rose 10.4% to $14.5 billion.
• Home equity loans were about 25% of the number and 18% of the value. The number fell 3.1% to 48,429, and the value rose 0.1% to $3.9 billion.
• First-lien home equity lines of credit were 10% of the number and 15% of the value. The number rose 8.6% to 19,085, while the amount rose 18% to $3.2 billion.

Among the credit unions, the average second-lien HELOC rose 11% to $113,229 in 2024, the average closed-end second mortgage rose 3.2% to $80,820 and the average first-lien HELOC rose 8.3% to $167,085.

In the MBA survey, the average amounts were $776,797 for second-lien HELOC, $376,540 for second-lien home equity loans, $460,820 for first-lien HELOCs and $41,577 for first-lien home equity loans.

Like credit unions, the MBA found 75% of its survey volume was first- and second-lien HELOCs and 25% were home equity loans.

Other highlights from the MBA’s study included:

• HELOCs and home equity loan balances grew 10.3% last year. Among all 4,508 credit unions, the NCUA found second liens of all types were $155.6 billion as of Dec. 31, 2024, up 18% from a year earlier.
• The MBA’s lenders said they expect HELOC balances to rise 9.8% in 2025 and 9.5% in 2026. They said they expect home equity loan balances to increase 6.6% in 2025 and 4.1% in 2026.
• Home improvement was the reason for borrowing for 46% of the loans last year, down from 56% in 2023 and 65% in 2022. Credit union borrowers said home improvement was the purpose for 42% of the loans last year, down from 40% in 2023.
• Debt consolidation was cited as the reason for 39% of 2024 loans, which the MBA said was a high for its studies going back to 2018. It was up from 33% in 2023 and 25% in 2022.
• The MBA also found evidence of possible credit tightening. For the first time since 2020, average FICO scores for HELOCs rose from 760 in 2023 to 771 in 2024. For home equity loans, scores rose from 742 in 2023 to 749 in 2024.

The HMDA data doesn’t provide credit scores. It does show debt-to-income ratios, mostly in ranges.

For the credit union sample, nearly half (48.2%) of borrowers had ratios from 37% to under 50%, basically unchanged (+0.2 percentage points) from a year earlier.

The change occurred at the extremes. Those with ratios under 36% accounted for 33.9% of borrowers last year, falling 1.8 percentage points from 2023, while those with ratios of 50% or more rose 2.2 percentage points to account for 22.8% of borrowers.

Among the credit unions, the biggest gain in production last year occurred at Logix Federal Credit Union of Burbank, Calif. Its HELOCs rose from just $11.2 million in 2023 to $200.7 million in 2024. The average rose 12% to $156,152.

The other biggest gains were at:

• Kinecta Federal Credit Union of Los Angeles, where HELOCs rose 92% to $200.8 million in 2024 and the average rose 12% to $180,585.
• SchoolsFirst Federal Credit Union of Santa Ana, Calif., where HELOCs rose 62% to $824.4 million in 2024 and the average rose 17% to $153,871.
• FourLeaf Federal Credit Union of Bethpage, N.Y., where HELOCs rose 51% to $1.07 billion in 2024 and the average rose 15% to $162,215.
• Navy Federal Credit Union of Vienna, Va., where HELOCs rose 40% to $1.98 billion in 2024 and the average rose 12% to $109,671.
• Digital Federal Credit Union of Marlborough, Mass., where HELOCs rose 41% to $254.5 million in 2024 and the average rose 12% to $158.889.

The largest declines were at:

• Global Federal Credit Union of Anchorage, Alaska where HELOCs fell 78% to $40.5 million in 2024 and the average fell 37% to $104,459.
• Security Service Federal Credit Union of San Antonio, where HELOCs fell 40% to $215 million in 2024 and the average fell 3% to $152,079.
• Mountain America Federal Credit Union of Salt Lake City, where HELOCs fell 24% to $454.5 million in 2024 and the average rose 7% to $117,066.