Home Equity Lending Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022-2027)

Home equity loans market size has attained a significant growth and is expected to follow the same trend during the forecast period. Home equity loans allow homeowners to borrow against the equity in their homes. Equity is the difference between your home’s value and what you owe on your mortgage. Home equity loans are popular among borrowers who want to use the funds for home improvement projects or to pay off or consolidate high-interest debt. A major growth opportunity is arising for banks and credit unions in home equity loans and lines of credit because of a massive increase in home prices.

A major growth opportunity is arising for banks and credit unions in home equity loans and lines of credit because of a massive increase in home prices. Higher real estate values and the lowering of regulatory restrictions are encouraging Canadians to use their homes as collateral for loans. In February 2022, the seasonally adjusted balance of home equity lines of credit increased 1% to USD 128 billion. Residential mortgage debt accounts for 74% of all household debt in Canada, which helps to build net worth, whereas lines of credit account for 16% and credit card debt accounts for 4%.

Key Market Trends

Rise in Housing Infrastructure would propel demand for Home Equity Lending

The rising population, burgeoning need for quality housing and infrastructure, along with increasing trend of nuclear families are favoring the residential infrastructure development growth. Rise in home prices, trending home improvements and innovations, tax deduction of the interest, less payment of interest as compared to other ways of borrowings, availability of lump sum amount of cash up front, and fixed monthly payments are the factors which act as driver for the global home equity lending market. Bank of America Corp., the largest U.S. home equity lender among banks and thrifts, reported $40.73 billion in home equity loans and lines of credit as of Dec 2019. With rising construction of housing units worldwide, the requirement for home equity lending would witness an upsurge in the years to follow.

Surge in House Prices Boosting Home Equity Lending Market

House prices rose by more than 5% in 23 countries out of the 60 countries in the IMF's Global House Price Index for 2020. Top countries that witnessed the highest hike are Luxembourg, Turkey, New Zealand and Canada. Leading the surge were cities in the Americas, where housing prices increased 15% on average. Cities in the Asia-Pacific region lagged, registering an average 9% annual price increase, according to the agency’s Global Residential Cities Index for the fourth quarter of 2021. Homeowners are becoming more equity rich and will be able to tap into the reserve available as home prices continue to rise. In the coming years, it is expected that homeowners would continue to use home equity loans more. Because home equity loans are secured as the market value of the property surges, a rise in the price of the property will offer a large enough margin to take out a loan against it.

Competitive Landscape

The report covers major international players operating in the global home equity lending market. In terms of market share, market is consolidated and major players dominate the market. However, with technological advancement and product innovation, mid-size to smaller companies are increasing their market presence by securing new contracts and tapping new markets. Some of the major players in the Global Home Equity Lending Market are Bank of America Corporation, Discover Bank, Member FDIC and many more.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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