Key facts
- Home equity lending is a growing priority for mortgage executives.
- Homeowners are using second-lien products for renovations, debt consolidation, and investments.
- Home equity originations are projected to reach $150 billion in 2026.
- Recapture rates for servicers average around 90%, significantly higher than independent mortgage banks.
Mortgage industry leaders are focusing on home equity lending, borrower retention, and technology as key priorities through 2027, according to discussions at the Mortgage Bankers Association (MBA) Annual Convention & Expo. Homeowners are increasingly utilizing second-lien products like home equity loans and HELOCs to fund renovations, consolidate debt, and make real estate investments without altering their primary mortgages.
Executives anticipate a significant shift towards home equity lending. Tom Davis, chief sales officer at Deephaven Mortgage, projects home equity originations to reach approximately $150 billion in 2026, potentially surpassing non-QM lending by loan count by 2027, leveraging an estimated $35 trillion in available home equity. This trend is driven by homeowners' desire to renovate, with an estimated $600 billion in projects, and to pay down high-interest consumer debt.
Mortgage servicers are also intensifying efforts on borrower recapture, aiming to retain customers for future business. LoanCare is employing data analytics and AI through its Illuminex platform to personalize outreach strategies and improve recapture rates, which average significantly higher for servicers (around 90%) compared to independent mortgage banks (30-35%). Companies like Griffin Funding are experiencing rapid growth in their home equity offerings, particularly for self-employed borrowers and real estate investors seeking flexible financing options.