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Are You Capitalizing on the Rising Demand for HELOCs?

  •  By Ellie Mae

Have you noticed an increase in the number of homeowners taking out home equity lines of credit (HELOCs) in recent years? As housing prices continue to rise, many consumers are choosing to stay in their current homes and tap into the equity that has built up in their houses – and they are not alone!

Why is the demand for HELOCs on the rise?

In 2018, 25% of all U.S. properties with a mortgage were rich in equity – meaning that the combined estimated amount of loans secured by the property was 50 percent or less of the property’s estimated market value. (1) The demand to turn that equity into cash has been steadily increasing, with the number of borrowers accessing HELOCs jumping 18% during the first quarter of 2018, up 14% from the same time the previous year. (2) In fact, the total addressable market for new HELOCs today is a staggering $733 billion. (3)

This increase in demand for HELOCs is being driven by two main factors:

  1. Today's strong economy: Consumers are confident in their financial well being and lenders are confident in the borrower's ability to make their payments. When comparing today's macroeconomic trends to those from 2006, the numbers look similar - and in some cases even better than before the recession.
  2. Comparing economic growth between 2006 and 2018
    Figure 1. Comparing economic growth between 2006 and 2018

  3. Rising house prices: Since 2012, U.S housing prices have continued to rise 4.2% year over year, with an average price of about $258,000.(3) This has many borrowers staying in their current homes, building up equity, and then accessing that equity to fund their current financial needs—from making home improvements to funding their kids’ college education.

  4. Based on a study completed by TransUnion in October 2017, approximately 10 million consumers are expected to originate a HELOC between 2018 and 2022.(4) So, while our economy remains strong and interest in HELOCs rise, there is huge opportunity for lenders to capture new business.  

Who are the HELOC consumers?

To capitalize on the demand for HELOCs, lenders first must understand their target audience in order to identify those interested in a home equity line of credit. Based on 2019 Experian IntelliView SM research, HELOC borrowers typically have the following traits:

  • Have prime or better credit quality: 94% of new 2018 HELOC originations were prime loans or better. (3)
  • Are over 35 years old: 55% of HELOC consumers in 2018 were between 51-71 years old and 25% were between 36-50. (3) Despite the Boomer generation being over half of the market, there is aopportunity to tap into the Gen Z and Millennial generations as more of this population starts to purchase homes.
  • Have high income levels: Borrowers with a standard mortgage have an average income of $66,000 per year, whereas HELOC consumers have an average of $73,000 per year. Their average debt to income ratio has also been decreasing with today's HELOC borrowers’ debt to income being 39%, where it was 52% in 2006. (3)

How can you capitalize on the rising demand for HELOCs?

With demand for HELOCs on the rise, there is huge opportunity for lenders to come in and take a large piece of this market. Ellie Mae’s ® Encompass® Digital Lending Platform offers a great solution today to support your ability to originate HELOCs, some highlights include:

  • Accepting HELOC applications: Consumers can submit HELOC applications through Encompass Consumer Connect ®, enabling you to pull all of your residential real estate lending together onto a single platform.
  • Robust subordinate financing screen: Lenders often use HELOCs in a variety of different ways. By bringing together multiple HELOC lending scenarios onto a single screen with a variety of loan-to-value calculations, you can easily see the overall lending picture based upon your borrower’s specific situation.
  • Variety of payment calculations: Lenders regularly employ different calculations to qualify their borrowers and calculate their payments during the life of a HELOC loan. Encompass supports a variety of payment scenarios to fit just about any HELOC product.

Throughout 2018, we witnessed a steady rise in the volume of HELOC loans in Encompass, as well as a significant reduction in days to close. In 2019, we are continuing to invest in features designed to support HELOC originations and help you further capitalize on the rising demand of these loan products.

Contact us to learn more about how Ellie Mae can help you drive innovation home.


1. Equity Rich U.S. Properties Increase to New High in 2018. February 5, 2019. ATTOM Data Solutions.
2. HELOC Use Is on the Rise. June 29, 2018. HousingWire. 
3. How Lenders Can Capitalize in the Rising Demand for HELOCs. IntelliView SM, 2019. Experian.
4. The Return of the HELOC: The Number of Consumers Opening HELOCs May Double During the Next Five Years. October 24, 2017. TransUnion.