HELOC originations up 20%: Lead with equity as refis stall

• Expert Quote: “Home equity demand should remain relatively resilient, supported by several quarters of steady HELOC growth.” — Satyan Merchant, Senior Vice President, TransUnion
• Supporting Data: HELOCs accounted for more than half of all home equity activity in the second quarter.
  Overview bullets generated by AI with editorial review.   

As interest rates remain elevated, borrowers are searching for solutions that unlock home equity without requiring a mortgage refinance.

Processing Content

Home equity originations increased 10.1% year over year to 757,000 in the second quarter, with home equity line of credit originations rising 20.3%, according to TransUnion’s Q3 2026 Credit Industry Insights Report. HELOCs accounted for more than half of all home equity activity.

“Homeowners are increasingly turning to home equity products as a way to access cash without giving up the low rates on their primary mortgage,” Satyan Merchant, senior vice president, automotive and mortgage business leader at TransUnion, told National Mortgage News. “Demand is likely to remain strongest for HELOCs, which offer flexible, on-demand access to equity while preserving existing first-lien financing.”

Mortgage originations as a whole jumped 12.8% on an annual basis to 1.5 million in the second quarter, as lower rates supported stronger activity. Refinance volume rose about 40%, increasing its share of total originations to 21.5% from 17.4% a year earlier. Rate-and-term refinances led the spike, jumping nearly 60%, according to the report.

But interest rates rose above last year’s levels for much of the third quarter and all of the fourth quarter so far, which Merchant expects to sideline homebuyers and subdue activity. The 30-year fixed rate mortgage has fallen recently, down to 7.24% last week, but it remains more than a percentage point above the same week last year, according to Freddie Mac.

“However, home equity demand should remain relatively resilient, supported by several quarters of steady HELOC growth as homeowners continue to tap accumulated equity rather than refinance into higher-rate mortgages,” Merchant added.

Finance of America’s third quarter earnings further portrayed this. The reverse mortgage lender’s funded volume increased 24% year over year and 2% from the second quarter while the rest of the industry struggled to combat high rates.

Mortgage performance was generally stable, although serious delinquency rates continued to normalize from historically low pandemic-era levels. The percentage of borrowers 60 or more days delinquent reached 1.64% in the third quarter. The increases concentrated primarily among Federal Housing Administration loans, which now represent nearly half of all seriously delinquent mortgage accounts. Performance on other loan types, including Fannie Mae, Freddie Mac and jumbo, were steady.

“Looking ahead, interest rates will continue to shape purchase and refinance demand,” Merchant said. “At the same time, home equity products may remain an important source of liquidity for borrowers seeking to preserve their low mortgage rates.”