Unlocking Today's Home Equity Market — 5 Takeaways

From “Unlocking Today’s Home Equity Market,” a Curinos-sponsored webinar of August 11, 2026, featuring: Ken Flaherty, Director, Retail Lending, Curinos; Ralph Armenta, President, Lending-in-a-Box; Jared Jones, General Manager, Home Lending, Upstart; and Saket Nigam, Senior Director, Wholesale Partnerships, Figure.

1. Nonbanks are winning second-lien share by being different, not riskier.

Banks and credit unions together originated 85% of subordinate-lien loans in 2022, but by 2025 that combined share had fallen to 66%. Meanwhile, nonbanks nearly quadrupled their share from 8% to 29%, with HELOC originations at nonbanks up 140% over the same period. This isn't about nonbanks chasing riskier borrowers to win volume. The nonbank borrower profile actually skews toward smaller loan sizes and shows no high-DTI tail, with pricing only about 50 basis points above depository HELOCs. What's different is the product experience and the underlying motivation: nonbanks and fintechs have built for borrowers who wants to draw funds now, not hold an undrawn line as a convenience. That distinction, more than any credit-quality gap, explains why depositories are losing share of a market where 90% of American homeowners now hold tappable equity.

2. The shift in consumer behavior is structural, not a cyclical blip.

The real driver of demand is macro forces rather than a temporary rate environment. Over the past five years, credit card balances are up 50%, to $1.23 trillion, and personal loan balances are up 85%, to $269 billion, which is pushing more households toward debt consolidation through home equity lending. Since 2022, it’s risen rose from 25% to 39% of demand. At the same time, nearly 79% of mortgage holders are locked into a rate below 6%, so renovating or adapting the home they're in has become more attractive than moving and giving up that rate. Real estate investing has added a third leg, with the investor share of home sales ticking up to 11.3% in 2025, disproportionately driven by small investors who own ten or fewer properties. Even a moderate drop in mortgage rates wouldn't meaningfully reverse this demand, because the underlying debt and lock-in dynamics move on a much longer timeline. That’s why today's home-equity opportunity is multi-year rather than a short-lived cyclical spike.

3. The gap in delinquencies is more about utilization and credit box mix, not credit quality.

Raw 30+ day delinquencies for nonbank HELOCs are nearly double that of depository HELOCs — 2.4% versus 1.4% — but a direct comparison of the two headline numbers in isolation is misleading. Average utilization of the committed line at closing is roughly 93% for nonbank (securitized) HELOCs versus about 36% for depository HELOCs. In addition, nonbank originators have deliberately chosen to lend across a somewhat wider FICO and combined loan-to-value (CLTV) credit box than many depositories. When the sectors are matched on those characteristics, delinquency curves by time since origination look extremely similar across channels. A third factor is that independent mortgage banks (IMBs) using third-party sub-servicers can see a short-lived, resolvable bump in early delinquency purely from onboarding friction, which existing customers of depository lenders typically don’t encounter. Taken together, the headline delinquency gap reflects business-model and mix choices an institution can control rather than an inherent flaw in nonbank credit quality.

4. Speed and cost advantages are available without loosening the credit box.

Curinos' benchmark data show a stark operating gap: depository HELOCs cost roughly $1,000–$2,500 to produce and take about 40 days total from application to booking, versus under $1,000 and about 15 days for nonbank HELOCs. But the gap needn’t be closed by taking on more risk but by adopting these concrete levers: automated income and cash-flow verification through account-linking providers, automated lien verification, greater reliance on automated valuation models (AVMs) or desktop appraisals over full in-person appraisals, and remote online notarization. All of these reduce cost and cycle time while holding credit quality constant. The goal isn't to move every loan from 40 days to 15, but to identify the half of borrowers who both need to move fast and are able to and building a fast, friction-light path specifically for them. Closing this gap is achievable on existing technology for institutions willing to be smarter about where they invest their effort.

Fulfillment-only cost to produce is used by many institutions, including Fifth Third, to evaluate internal unit economics. Itcovers core back-office operations (processing, underwriting, and closing), while excluding commissions and vendor fees.​

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5. Closing the gap is a continuum of choices, not a single build-or-buy decision.

Along the full “operating continuum” — running from legacy in-house, through transformed in-house and hybrid models, to partner-powered origination and buying distributed risk — speed and unit cost can be won at more than one point on the spectrum. It’s legacy that’s really the only losing posture. Partnerships are a supplement to an institution's strategy, not a replacement for it, no matter what the volume of originations. Two-way partnership models include originating on a partner's technology, selling paper into a partner's capital-markets outlet, or using warehouse financing. The specific structure depends on what’s best for the institution: balance growth, a new product, or relief from a multi-year legacy-system replacement. Lenders should start by answering two internal questions rather than searching for a single silver bullet: what is the institution's actual strategic appetite for home equity, and does the institution have the capability and willingness to build the capacity internally. Answers to those two questions, positioned against each other, point directly to one of four practical postures: transform in-house, hybrid, partner under existing brand, or partner/buy distributed risk. The biggest risk isn't picking the wrong position on the continuum; it's remaining in analysis paralysis by picking none.