Home Equity Lending Market – Global Industry Size, Share, Trends, Opportunity, and Forecast, Segmented By Type (Fixed Rate Loans, Home Equity Line of Credit), By Service Provider (Banks, Online, Credit Union, Others), By Region, By Competition, 2020-2030F

Market Overview

The global Home Equity Lending Market was valued at USD 30.24 Billion in 2024 and is expected to reach USD 37.79 Billion by 2030 with a CAGR of 3.84% during the forecast period. Due to high home prices and sustained interest rates, homeowners are increasingly using home equity for purposes like property improvements or debt repayment. Refinancing opportunities have significantly reduced because of rising mortgage rates compared to the ultra-low rates. Instead, home equity lines of credit (HELOCs) and home equity loans are becoming more popular, as homeowners prefer tapping into accumulated equity while maintaining their existing low mortgage rates. This trend is especially notable among homeowners with substantial equity. Home equity lending reached its highest level in the first half of 2024. During this period, lenders issued over 333,000 new home equity loans totaling approximately USD23.6 billion. Year-over-year, home equity counts rose by 40%, while loan amounts surged by 69% in 2024. Activity in home equity lending declined in 2023 and 2024. In the first half of 2024, lenders issued around 671,000 new HELOCs, totaling nearly USD105 billion. Year-over-year, both HELOC counts and amounts decreased by 2% and 4%, respectively, in 2024.

Loans in the global banking industry have been steadily increasing, leading to greater demand for collateral as a risk mitigation strategy. Countries like the US, Canada, Russia, China, and Australia have seen a significant rise in housing prices post-COVID, boosting home equity lending. As interest rates rise to combat inflation, home equity lending has surged, with housing markets experiencing higher price growth.

Market Drivers

Rising Property Values

One of the major drivers of the home equity lending market is the increase in property values. As housing markets experience appreciation, homeowners accumulate more equity in their properties. Home equity is the difference between the home's market value and the remaining mortgage balance. When home values rise, homeowners are in a better position to borrow against their increased equity, as the value of their homes serves as collateral for lenders. Higher property values also reduce the perceived risk for lenders, as they have more security in the event of default. The 2025 real estate outlook suggests that property prices will continue to rise, albeit at a slower pace, due to factors like inflation, interest rates, and growing demand in urban areas. Buyers should expect increased property prices in the near term, especially in metropolitan cities, but developers are focusing more on affordable housing. There's also growing interest in eco-friendly and smart homes. Real estate experts predict that housing prices will rise moderately in 2025, with single-digit growth, in contrast to the 21% surge of 2024. The market will stabilize due to increased costs and high demand, while significant new supply from developers is expected. According to Anarock data, housing prices in the top 7 cities saw an annual increase of 13-30%, driven by higher input costs and strong buyer demand. Delhi-NCR experienced the largest jump, with prices rising by 30%. Overall, the average residential price across these cities grew by 21%.

Low Interest Rates

Low interest rates have significantly contributed to the expansion of the home equity lending market. When central banks reduce interest rates, borrowing becomes more affordable, making home equity loans and lines of credit attractive options for homeowners. With lower interest rates, homeowners can access funds at a fraction of the cost compared to other forms of borrowing, such as credit cards or personal loans. This environment makes it easier for consumers to refinance existing mortgages or open new home equity lines of credit (HELOCs) to take advantage of favorable terms. As borrowing becomes more affordable, the demand for home equity lending products rises. Furthermore, low interest rates increase consumer confidence in the economy, prompting more individuals to tap into their home equity for various financial needs.

Increased Consumer Awareness

The growing awareness among consumers about the benefits and flexibility of home equity lending is another significant driver. Homeowners are becoming more educated about the potential uses of home equity loans or HELOCs, such as financing home improvements, consolidating high-interest debt, or paying for educational expenses. This increased understanding of how home equity can be leveraged for financial needs encourages more homeowners to consider these options. Advancements in digital platforms and online financial tools have made it easier for consumers to compare different loan products, understand terms, and apply for home equity loans. The increased availability of information and simplified application processes have made home equity lending more accessible, driving market growth. 

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Key Market Challenges

Rising Interest Rates

One of the primary challenges facing the home equity lending market is the potential rise in interest rates. Central banks, like the Federal Reserve, adjust interest rates to control inflation and stimulate or slow economic activity. As interest rates rise, borrowing costs increase, which directly impacts the affordability of home equity loans and lines of credit (HELOCs). Homeowners may be less inclined to borrow against their property if the interest rates on these loans are higher, making it a more expensive option compared to alternatives like personal loans or credit cards. In addition, rising rates could make it more difficult for homeowners with existing home equity loans to manage their debt, leading to higher default rates. For lenders, the risk of defaults increases in a high-rate environment, which could lead to tighter lending conditions and less favorable terms for consumers. This dynamic could dampen consumer demand for home equity lending products, thereby slowing market growth.

Regulatory Challenges

The home equity lending market is subject to a complex and evolving regulatory landscape. Governments and financial authorities regularly introduce new regulations aimed at protecting consumers and ensuring the stability of the housing market. While regulations are important for consumer protection, they can also create challenges for lenders and borrowers in the home equity market. For instance, stricter lending standards, including higher credit score requirements and more comprehensive income verification, may limit the pool of eligible borrowers. These regulatory changes can also make the approval process longer and more cumbersome, reducing the overall efficiency of the market. Furthermore, regulatory uncertainty can create confusion among consumers and lenders about what is permissible, leading to hesitancy and caution in making lending decisions.

Key Market Trends

Increased Adoption of Digital Platforms

A significant trend in the home equity lending market is the increased adoption of digital platforms. As more consumers turn to the internet for financial services, the home equity lending sector has seen a shift toward online applications, digital documentation, and automated approval processes. Lenders are embracing technology to streamline operations, reduce overhead costs, and improve the customer experience. Digital platforms provide homeowners with easy access to home equity loan information, enabling them to compare interest rates, loan terms, and fees across various lenders. The convenience of online tools, such as loan calculators and pre-qualification applications, allows consumers to make informed decisions without the need for in-person visits. This has broadened access to home equity loans, making it easier for consumers to secure financing and empowering them with more control over the borrowing process.

Shift Towards Home Improvement Financing

Another major trend in the home equity lending market is the growing use of home equity loans and lines of credit for home improvement projects. As property values rise, homeowners are increasingly leveraging their home equity to fund renovations, remodels, and upgrades rather than relying solely on traditional savings or credit lines. Home prices have been steadily increasing, and homeowners are seeing their properties’ values rise, making them more willing to invest in improvements that could further enhance their home’s value. Second, with supply chain disruptions and inflation, many homeowners prefer to invest in improving their existing homes rather than purchasing new ones, especially as the cost of new homes and construction materials remains high.

Segmental Insights

Type Insights

The Home Equity Line of Credit (HELOC) is dominating the Home Equity Lending Market due to its flexibility and favorable borrowing conditions. Unlike fixed-rate loans, HELOCs offer a revolving line of credit, allowing homeowners to borrow funds as needed, up to their approved limit, and only pay interest on the amount borrowed. This flexibility makes HELOCs ideal for various financial needs, including home improvements, debt consolidation, and education expenses. Additionally, HELOCs often come with lower initial interest rates compared to other loan options, such as personal loans or credit cards, making them an attractive choice. The ability to make interest-only payments during the draw period provides homeowners with more manageable payment options. With increasing demand for financial flexibility, the popularity of HELOCs is expected to continue growing, outpacing fixed-rate home equity loans and solidifying their dominance in the market.

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Regional Insights

North America accounts for the largest market share in the Home Equity Lending Market, driven by a strong real estate market, rising property values, and consumer demand for home equity products. In the U.S., increasing home prices have led to higher home equity, encouraging homeowners to tap into this asset for purposes like home improvements, debt consolidation, and education. Additionally, low interest rates in recent years have made home equity loans and lines of credit (HELOCs) more affordable, further boosting market growth. North America's well-established financial institutions and the widespread availability of home equity lending products have also contributed to its market dominance. The increasing adoption of digital platforms for loan applications and the rising trend of leveraging home equity for financial flexibility have solidified the region's position as the largest market for home equity lending globally.

Recent Developments

In 2024, Better Home & Finance Holding Company has introduced the Better Home Equity Loan, a fully digital addition to its home equity product suite, which also includes cash-out refinance and HELOC options. This new loan allows qualified homeowners to access up to 90% of their home equity at a fixed annual percentage rate (APR). Currently available in 30 states, with additional states being added, this offering enhances accessibility to home equity cash for homeowners.

In 2024, Unison Mortgage Corporation has launched its Equity Sharing Home Loan in Oregon, offering homeowners the opportunity to access cash at below-market rates. This loan combines home loans and equity sharing agreements, enabling homeowners to convert part of their equity into cash with low monthly payments. The loan is designed for those with low-interest mortgages, helping them access cash while maintaining favorable rates.

In 2024, loanDepot, Inc. has expanded its equityFREEDOM product suite with the introduction of a new home equity loan. This offering allows homeowners, who collectively hold a record USD32.7 trillion in home equity, to access financial tools like the equityFREEDOM Home Equity Loan and Home Equity Line of Credit (HELOC). These solutions help homeowners lower borrowing costs without affecting their existing mortgage rates, especially for those with mortgages under 4% interest.

Key Market Players

• Bank of America Corporation
• Discover Financial Services, Inc.
• Federal Deposit Insurance Corporation
• loanDepot, Inc.
• Spring EQ, LLC
• TBK Bank
• SSB COMMUNITY BANK
• U.S. Bancorp
• PNC Financial Services Group, Inc.
• Pentagon Federal Credit Union

Report Scope:

In this report, the global Home Equity Lending Market has been segmented into the following categories, in addition to the industry trends which have also been detailed below:

·         Home Equity Lending Market, By Type:

o   Fixed Rate Loans

o   Home Equity Line of Credit      

·         Home Equity Lending Market, By Service Provider:

o   Banks

o   Online

o   Credit Union

o   Others

·         Home Equity Lending Market, By Region:

o   North America

§  United States

§  Canada

§  Mexico

o   Europe

§  France

§  Germany

§  Spain

§  Italy

§  United Kingdom

o   Asia-Pacific

§  China

§  Japan

§  India

§  Vietnam

§  South Korea

o   Middle East & Africa

§  South Africa

§  Saudi Arabia

§  UAE

§  Turkey

§  Kuwait

§  Egypt

o   South America

§  Brazil

§  Argentina

§  Colombia

Competitive Landscape

Company Profiles: Detailed analysis of the major companies presents in the global Home Equity Lending Market.

Available Customizations:

Global Home Equity Lending Market report with the given market data, Tech Sci Research offers customizations according to a company's specific needs. The following customization options are available for the report:

Company Information

• Detailed analysis and profiling of additional market players (up to five).