MBA: Home equity debt rose 10% in 2024 — signaling it as a ‘product of choice’

Total originations of open-ended home equity lines of credit (HELOCs) and closed-end home equity loans increased in 2024 by 7.2% from the previous year, when comparing originators that reported in both years. That’s according to the Mortgage Bankers Association (MBA)’s 2025 Home Equity Lending Study.

The study, conducted in the spring of 2025 and using data through Dec. 31, 2024, analyzed $24.8 billion in originations, $167.4 billion in maximum credit extended and $70 billion in outstanding loans as of year-end.

The report, which provides benchmarking data on volume, product mixes, utilization rates, operational costs and growth expectations, found that total HELOC and home equity loan debt outstanding by grew 10.3%.

“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,” said Marina Walsh, MBA’s vice president of industry analysis.

“Lenders in our study expect year-over-year growth of almost 10% for HELOC debt and 7% for home equity loan debt in 2025.”

The reasons for tapping home equity are shifting. According to borrower data, home renovations accounted for only 46% of total origination volume in 2024, down from 56% in 2023 and 65% in 2022. Meanwhile, debt consolidation increased to 39% of the volume in 2024, up from 33% in 2023 and 25% in 2022.

“While there are additional opportunities in this space for lenders, there are also challenges,” Walsh added. “For example, just 50% of home equity applications are closing, and turn times are averaging 39 days. Automated valuations and decisioning, integrations with mortgage platforms, and accessible self-service options are a few ways lenders intend to increase efficiency and reduce costs.”

In 2024, automated valuation models (AVMs) were used for 47% of total originations, while 26% relied on desktop valuations (DVs), which typically involve either an exterior or drive-by inspection, or no inspection.

In contrast, 24% of originations necessitated a full appraisal, typically including both interior and exterior inspections. The remaining 3% utilized alternative valuation methods.

For originators of open-ended HELOCs and closed-end home equity loans that reported in each of the past two years, total average volume increased to $2.3 billion per company in 2024, up from $2.14 billion in 2023.

In 2024, the average HELOC commitment volume among repeat lenders rose to $1.7 billion, up from $1.6 billion in 2023. Borrower credit quality improved, with average FICO scores increasing to 771 from 760, while the average combined loan-to-value (CLTV) ratio at closing dipped from 53% to 51%

Pull-through rates held steady at 49%, compared to 48% the year prior.

Outstanding HELOCs grew 5.4% during the year, although utilization rates declined across origination vintages. For instance, at nine months post-origination, utilization averaged 42% in 2024, down from 45% in 2023.

Lenders project outstanding HELOC debt will grow 9.8% in 2025 and 9.5% in 2026, the report stated.
Average home equity loan originations reached $844 million per company in 2024, up from $788 million in 2023 among repeat lenders. Borrower credit quality improved, with average FICO scores rising to 749 from 742, while the average CLTV held steady at 62%.

Pull-through rates saw a notable jump, climbing to 46% in 2024 from 39% the year prior. Outstanding home equity debt increased 19% over the year. Looking ahead, lenders expect outstanding debt to grow 6.6% in 2025 and 4.1% in 2026.