Connect with the author: kenneth.flaherty@curinos.com
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. Closed-end home equity loan demand softened, however, highlighting a widening split between open-end and closed-end products as borrowers remain selective about how they access their equity.
This alignment between forecast and actual matters because it reframes the market’s near-term trajectory. Looking ahead to the second half, Curinos’ forecast suggests an additional 1% to 4% in origination growth. But while aggregate growth remains positive, product mix and borrower engagement will matter more than headline origination trends alone.
Curinos Home Equity Originations Forecast: Year-over-Year Growth Rates
Source: Curinos Home Equity Modeling
The macro-economic backdrop has also become more supportive. Softer inflation, helped by a recent if perhaps temporary reduction in energy costs, has mitigated some of the headwinds that typically accompany rising prices and flagging consumer confidence. At the same time, the probability of the Fed increasing rates later this year appears less likely than it did in May, reducing one source of consumer tentativeness.
Still, consumers remain cautious and affordability challenges persist, which means that lenders will continue to be operating in a competitive environment. But with tappable equity still substantial and many homeowners reluctant to disrupt low-rate first mortgages, home equity remains well positioned for continued growth in the months ahead.
Get access to the data that informed this article