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The real estate boom triggered by the pandemic has significantly increased the value of homes and homeownership. The average homeowner with a mortgage has approximately $214,000 in equity (the portion of their home that they own at will).
U.S. homeowners looking for cash are turning to using their homes for financing through home equity lines of credit (HELOCs) and home equity loans (HELoans). Interest rates on these products have risen in the last year, as have overall rates, but they can still be better than mortgage refinances and other types of loans.
Below is a list of the 10 largest home equity lenders (in terms of transaction volume) that are the most active originators of home equity loans and HELOCs, according to data compiled for Bankrate by trade publications. Inside Mortgage Finance.
Top 10 Home Equity Lenders
Bank of America. The megabank, which is particularly active in home equity lending, made $4.38 billion in loans in the first half of this year. We only offer HELOCs, but you can convert your balance to a fixed rate.
Citizens Bank. The Rhode Island-based financial institution made a small exit in 2023, making $3.85 billion in home equity business. We offer HELOCs starting at $5,000.
PNC Bank. The Pittsburgh-based bank had $2.7 billion in business through the first half of 2023. We promise funding in as little as 10 days.
Rocket Mortgage. The online financial giant has ramped up its relatively new home equity business, disbursing $2.6 billion in home equity loans so far this year.
Figure rental. The lender had done $2.5 billion in transactions through the first half of this year. Its HELOC is quite unique in that it is a fixed rate product and functions much like a HELoan.
Navy Federal Credit Union. Navy Federal, the only credit union on the list, has loaned $2 billion in home equity loans and HELOCs. Terms are generous, but only past and present military personnel and their families are allowed to participate.
US bank. The Minneapolis-based lender has slowed its lending pace this year, reducing HELoan and HELOC business by 51.9% compared to last year. Still, it’s a big company with $1.9 billion in loans. Generously covers all closing costs for the borrower.
TD Bank. Canadian lenders loaned $1.75 billion in home equity loans and HELOCs. We are known for our strong customer service and competitive rates.
Huntington National Bank. The Ohio-based lender disbursed $1.74 billion in HELOCs and home equity loans in the first half of this year. This is aimed at large companies. To get the best interest rate available on a HELOC, Huntington specifies that a borrower must be approved for $75,000 or more.
Discover Bank. The lender, known for its cash-back credit cards, posted $1.5 billion in its home equity loan business. Its generous terms are aimed at borrowers with good credit.
If you want to learn more about financial institutions, check out Bankrate’s Best HELOC Lenders and Best Home Equity Loan Lenders guides.
Why home equity loans are popular now
Home equity lending is experiencing a lull. According to credit bureau Experian, the monthly number of home equity loans originated increased by 4.5% from 137,000 in June 2023 to 143,100 in June 2024. HELOC balances have begun to recover, increasing 20% from their bottom at the end of 2021, according to the New York Fed’s latest Quarterly Report on Household Debt and Credit.
Interest relates to interest rates. Mortgage rates have fallen in recent months, but are still higher than during the pandemic. So leveraging capital through cash-out refinancing, once the go-to tool for homeowners for home improvements and other needs, now makes less sense. Why pay off a 3% mortgage when your current loan interest rate is twice that? Instead of refinancing, a HELOC or home equity loan allows you to maintain a lower interest rate on your mortgage.
It is not that interest rates on housing assets are at a cheap level. According to a Bankrate survey of major financial institutions, the average interest rate on HELOCs was 8.94% as of October 2nd, while the average interest rate on home equity loans was 8.37%. However, even at these interest rates, home equity loans and HELOCs remain much cheaper than many personal loans and credit cards.
And there are deals out there, especially when it comes to HELOCs. The most aggressive lenders want to win your business, so they often offer an introductory interest rate that’s one or two points lower than the regular rate. This is one reason why shopping around for HELOC offers can be beneficial. For example, Bank of America was advertising a HELOC rate of 6.74 percent as of Oct. 2, which was 2 percent below average. Home equity financing has other benefits as well. These products have a long lifespan, sometimes up to 30 years. And if the funds are used for home repairs or renovations, the interest is tax deductible.
