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Home equity lending is having a moment. American homeowners seeking cash have turned to tapping their residences for financing, via home equity lines of credit (HELOCs) and home equity loans. The pandemic-fueled real estate boom has led to a large appreciation in the worth of their ownership stakes: the average mortgage-holding homeowner has about $200,000 in tappable equity. And, while these products’ rates — like interest rates overall — have increased in the last year, they still can be more advantageous than a mortgage refinance or other types of loans.
Here’s a list of the 10 largest (in terms of volume) home equity lenders — the most active originators of home equity loans and HELOCs, according to data from trade publication Inside Mortgage Finance.
The top 10 home equity lenders
Bank of America has been a particularly aggressive player in home equity lines of credit (HELOCs) and home equity loans. It extended more than $5 billion in home equity debt in Qs 1 and 2 of 2023, making it the leader of the lender pack. So influential is it that, when HELOC rates spiked dramatically the week of Nov. 8, the rise was attributed to the lender discontinuing an intro rate on its line of credit.
- Bank of America. The megabank did $5.14 billion in loans in the first half of the year, up 12.5 percent from the first half of 2022.
- Citizens Bank. The Rhode Island-based financial institution pulled back a bit from 2022, doing $4.6 billion in home equity loans and HELOCs.
- PNC Bank. The Pittsburgh-based bank did $4 billion in business through the first half of 2023.
- U.S. Bank. The Minneapolis-based lender slowed originations this year, doing 51.9 percent less home equity and HELOC business compared to last year. Still, it’s a big player, with $2 billion in lending.
- Huntington National Bank. The Ohio-based lender did $1.8 billion in HELOCs and home equity loans in the first half of the year.
- Spring EQ. This Pennsylvania-based lender came on strong, doing $1.78 billion in business through the first half, up 68 percent from last year.
- TD Bank. The Canadian lender did $1.72 billion in home equity loans and HELOCs.
- Figure Lending. This lender had $1.32 billion in activity through the first half.
- Navy Federal Credit Union. The only credit union on the list, Navy Federal more than doubled its volume from a year ago, doing $1.31 billion in home equity lending.
- BMO Harris Bank. This lender booked $1.06 billion in home equity business.
While there’s a little overlap, the list of most active home equity lenders is markedly different from the scorecard of most active mortgage lenders. For example, Rocket sits atop the mortgage lenders list, but was 16th among home equity lenders, according to Inside Mortgage Finance. Wells Fargo is a big player in mortgages but doesn’t appear in the top 40 of the home equity rankings at all. Only Bank of America and U.S. Bank make both Top 10 lists.
Why home equity loans are popular now
Mortgage rates have spiked over the past two years. So for homeowners, tapping equity through a cash-out refinance — once the go-to vehicle for home renovations or other needs — doesn’t make much sense today. Why pay off your 3 percent mortgage when rates are at 7.5 percent today? A HELOC or home equity loan lets you keep your low-rate mortgage in place.
But home equity rates can be a bit of a shock, too. The average rate on a HELOC was 10.02 percent as of Nov. 21, according to Bankrate’s survey of large lenders, while home equity loans are averaging 8.95 percent. The HELOC rise has been especially aggressive: lines of credit were around 7.6 percent at the beginning of the year, and 4.25 percent in January 2022.
Even so, there are still lenders advertising lower rates. The most aggressive lenders want to win your business – they frequently dangle introductory rates that are a point or two below the going rate. That’s one reason why it pays to search around for HELOC offers. For example, Navy Federal Credit Union was advertising HELOC rates of 8.75 percent as of Nov. 21, more than a full point below the average.
While they’ve risen, home equity loans and HELOCs are still much cheaper than many personal loans and credit cards. Plus, home equity financing carries other advantages. These products offer long terms, sometimes up to 30 years. And — if the funds are used for home repair or renovation — the interest can be tax-deductible.