Total originations increased marginally from $2.10 billion per company in 2022 to $2.13 billion in 2023. The study noted a shift in borrower usage, with home renovations declining from 65% of volume in 2022 to 56% in 2023, while debt consolidation grew from 25% to 33%
For HELOCs, the average commitment volume decreased from $1.9 billion per company in 2022 to $1.8 billion in 2023. The average FICO score for HELOC borrowers dropped from 769 to 760, and the average combined loan-to-value (CLTV) at closing increased from 51% to 53%. Notably, the closings-to-applications pull-through rate for HELOC accounts fell from 56% to 48%.
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Home equity loans saw an increase in average originations from $428 million per company in 2022 to $657 million in 2023. The average FICO score for these loans decreased from 752 to 742, while the average CLTV at closing rose from 58% to 62%. The closings-to-applications pull-through rate for home equity accounts also declined, from 44% to 39%.
“Despite the tepid volume growth in 2023, our study shows an uptick in home equity debt outstanding,” Walsh said in the study. “The elevated mortgage rate environment slowed servicing runoff, and utilization rates also increased. Given the substantial amount of accumulated equity in real estate, there is still untapped potential for home equity lending for lenders and borrowers.”
Source: mpamag.com