Rob Leonard, director of consumer lending at Farmers National Bank, says demand for home equity loans and home equity lines of credit continues to grow as homeowners tap into rising home values to fund renovations, consolidate debt and cover other major expenses.
Leonard says home equity products now account for about 85% of the bank’s consumer lending production, up from 78% in 2023, while application volume has also increased significantly over the past several years.
He attributes the trend to homeowners remaining in properties they refinanced at historically low mortgage rates, allowing them to build substantial equity as home values appreciated and mortgage balances declined.
Leonard says most borrowers are using home equity financing for home improvement projects, helping increase the value of their properties while avoiding the need to move in a higher-interest-rate environment.
Debt consolidation has also emerged as a major driver, with borrowers using home equity products to pay off high-interest credit card balances and reduce monthly borrowing costs. Other homeowners are using the funds for education expenses or establishing a financial safety net for future needs.
Leonard adds that utilization rates on home equity lines of credit have increased in recent years, signaling that more borrowers are actively using the funds they have available as they look for flexible ways to manage expenses and strengthen their financial position.