Home equity has been the silver lining among the persistent rise of home prices and elevated interest rates, allowing homeowners to tap into their accrued wealth for necessities like property repairs and debt repayments. Meanwhile, jumbo mortgage originations experienced a noticeable decline in both dollar amounts and market share in 2023 and 2024 compared with previous years, CoreLogic reported.
Home Equity
Home equity lenders are partying like it's the first half of 2008, when lenders originated more than 333,000 new home equity loans totaling about $23.6 billion. Home equity counts and amounts increased by 40% and 69%, respectively, year-over-year in 2024.
HELOC activity made a comeback in the first two quarters of 2022, reaching its highest level since 2007. But, activity dropped in both 2023 and 2024. In the first two quarters of this year, lenders originated about 671,000 new HELOCs, totaling almost $105 billion. HELOC counts and amounts have fallen 2% and 4%, respectively, YOY in 2024.
California metros saw home equity loan activity soar the most. In the second quarter of 2024, the average California homeowner gained approximately $55,000 in equity during the past year. Meanwhile, home equity loan activity slowed in most of the metros in Texas, which posted annual equity losses of $2.6 billion in the second quarter of 2024.
"Home sales activity in September got a boost from a sharp decline in mortgage rates during August, which considerably improved buyer sentiment and sent pending sales soaring," said Dr. Selma Hepp, CoreLogic Chief Economist. "While the surge in activity illustrates pent-up demand waiting for rates to drop, volatility has once again reared its ugly head with a more recent jump in rates. Nevertheless, while that means slower home sales activity once again, buyers continue to show interest and readiness to step off the sidelines once mortgage rates ease up."
Jumbo Loans
Since 10% of outstanding jumbo loans have an interest rate at or above 6%, it’s not a surprise that CoreLogic found jumbo originations declining annually in both dollar amounts and market share in 2023 and 2024.
Origination volumes for both conforming and jumbo loans, including purchase and refinance loans, peaked in 2021. As interest rates suddenly shot up in 2022, origination volumes dropped. From their peak in 2021 to 2023, conforming loan volumes fell by 67%, while jumbo loan volumes declined by 61%.
From January to July, jumbo loan origination volume in 2024 fell by 2% from 2023 and fell by 56% from 2022. Jumbo origination volume is currently at its lowest level since 2014.
