Home equity lending is growing fast, and industry executives expect it to surpass Non-QM in origination volume as soon as 2027.
"I think equity originations are expected to surpass NonQM originations in 2027," said Tom Davis, chief sales officer at Deephaven Mortgage.
The growth is already showing up in lender pipelines.
The Numbers Behind The Ramp
Davis pointed to Nomura research as the basis for his projections.
He estimates 2026 equity origination volume at about $150 billion, compared with approximately $170 billion for Non-QM. Those figures are full-year estimates, not reported actuals.
Applying Nomura's 20% growth outlook for second liens, Davis estimates that "equity originations could hit $180B in 2027."
Nomura research projects second-lien origination volume could rise 20% in 2027 as cash-out refinancing becomes less economical at higher rates.
Davis does not expect Non-QM to shrink.
"I think Non-QM remains resilient and will be flat YOY," he said. "I do know if rates remain elevated, equity will be a larger market."
Separately, Davis said, "We expect equity originations to increase 20% year over year."
Annual Origination Volume
Market | 2026 Estimate | 2027 Projection |
|---|
Equity (HELOC/CES) | ~$150 billion | ~$180 billion Assuming 20% growth |
Non-QM | ~$170 billion | Flat According to Davis |
Source: Davis estimates; equity growth assumption based on Nomura research. Figures are projections, not reported actuals.
Bill Lyons, president and CEO of Griffin Funding, has heard an even higher estimate.
"I heard the number will be $300B this year," Lyons said.
For Non-QM lenders and brokers, the growth in home equity lending represents an opportunity rather than necessarily a shift away from their core business. Products such as DSCR HELOCs allow real estate investors to access equity without refinancing their first mortgage, while other second-lien products give originators another way to serve borrowers who may not fit traditional agency guidelines. As demand grows, lenders already operating in the Non-QM space have an opportunity to capture more of that business.
Lenders See It In Their Own Books
At Griffin Funding, equity lending has grown from 15% to 25% of the company's volume in a year.
"Last month HE was 25% of our volume. And it continues to grow," Lyons said. Asked what equity represented a year earlier, he answered: "15% of our business last Oct."
"2026 will not be the peak. It will run into 2027 and beyond," he added.
Deephaven is seeing similar momentum.
"Yes, our equity production continues to increase month over month. Equity production is a sizable percentage of our overall production," Davis said.
FirstClose, a home equity technology provider, is also seeing increased demand across its customer base.
"Yes, we're seeing momentum around home equity from our customer base, and the opportunity is significant," said David Bolin, vice president of marketing at FirstClose.
Why Borrowers Are Tapping Equity
The driver is straightforward: Many homeowners are reluctant to surrender their low first-mortgage rates while sitting on substantial tappable equity.
"Homeowners are sitting on nearly $11 trillion in tappable home equity and overall US consumer non-housing debt is increasing," Bolin said.
"Additionally, many are also holding onto first mortgages with rates they don't want to give up. That creates a desire for HELOCs and home equity loans as borrowers look for ways to access liquidity without disturbing their first mortgage," he added.
Michael Lee Erickson, vice president at West Capital Lending, sees the same pressures in his pipeline. Before moving to the broker channel, Erickson spent years in leadership at Rocket Mortgage.
"Everybody has a super low interest rate on their first, and home equity levels are at record highs, and so is their debt," Erickson said.
Deephaven puts total home equity held by U.S. homeowners at $35 trillion and tappable equity at $21 trillion. The lender also estimates that 67% of borrowers hold a first-lien rate below 5%.
Speed Is Winning The Business
Today's home equity products can be faster and more flexible than the traditional HELOC many borrowers remember.
"Now there's a lot of fixed interest rate, fully amortized HELOCs out there. So you get the best of both worlds," Erickson said. "You have the security of that traditional mortgage with the flexibility of the line of credit."
"A lot of these HELOCs you can have done in one to three days. So super speed, super easy, and a really great product," he added.
Bolin said speed and execution are increasingly separating successful home equity lenders from their competitors.
"The home equity lenders that treat speed and execution as competitive advantages are the ones having the most success," he said.
"Borrowers have a lot of options for lenders. A lender can generate plenty of applications, but if a file sits for days waiting for a title update or someone has to manually coordinate multiple vendors, that borrower can easily go somewhere else."
"The strongest performers in home equity can quickly turn borrower interest into a funded loan," Bolin said. "Winning in home equity is becoming less about who offers the product and more about who can deliver it well."
Borrower expectations have shifted, too.
"Their expectations are closer to a modern consumer lending experience than a traditional mortgage process. They want a simple application, quick answers, visibility into where they are in the process, and a fast path to accessing their funds," Bolin said.
"They don't expect accessing equity in a home they already own to feel like going through a 45-day first mortgage process all over again."
What Top Originators Are Doing
Davis said successful originators are treating home equity as a primary cash-out financing option.
"Today's cash-out game is equity; if originators do not embrace equity products, their cash production will be limited," he said.
"Originators who fully embrace equity products (closed-end seconds and HELOCs) as today's cash-out tool and the ones who are marketing equity to all their past clients are the ones who are taking advantage of today's cash-out opportunity," Davis added.
Erickson buys leads, runs text-message drip campaigns, and moves interested borrowers to the phone quickly.
"I'm not trying to qualify the borrower through text. I'm just trying to confirm and then get them on the phone, and then that's when I go to work," he said.
His approach emphasizes education over a hard sell.
"I'm not like a hard closer. I try to educate. I try to take a very consultative approach."
That includes explaining how a line of credit works.
"You're only going to pay on what you owe. That money then is available to you during the draw period. It's a safety net if you need it," Erickson said.
Equity Is Not The Only Answer
Lyons cautions that the convenience of home equity products can lead originators to overlook other financing options.
Asked whether digital equity products have made it so easy that MLOs can overlook a cash-out refinance for borrowers with a 3% mortgage rate, Lyons said: "Yes, low-hanging fruit/path of least resistance."
"Getting them to recalculate to see that it makes sense to refinance their first mortgage sometimes is an uphill battle because everyone proudly holds their first mortgage with a two or three handle," Andrew Berman said, referring to mortgage rates beginning with a 2 or 3.
Real estate investors are already comparing both approaches.
"Yes, investors are using the DSCR HELOC to BRRRR. They are looking at a 1st c/o refi VS. a DSCR HELOC and running the numbers to see what is better," Lyons said.
His advice to MLOs was direct.
"Don't get lazy. Work the numbers. Spend time with your client. Make sure the math makes sense," Lyons said.
"If you do help them fund a HELOC, make sure you stay in front of them. One day they will want to do a 1st and 2nd combo refi. Be the one they remember. Be the one that they come back to."
Hit Singles
Erickson said smaller home equity loans can keep an originator's business moving while larger deals develop.
"I see a lot of my peers shy away," he said. "We're in a volume-based driven business, right? So it's always a lot more appealing to write that $500,000 or $700,000 purchase or that $400,000 cash-out refi."
But he sees smaller equity loans as an opportunity to generate steady production and build long-term borrower relationships.
"I tell my team all the time, hit singles," he said. "If I write a $50,000 or $70,000 HELOC every day, I'm keeping the lights on, I'm paying for my leads, I'm keeping my business moving."
