Home equity lending volume held steady last year, with total originations of home equity loans and home equity lines of credit (HELOCs) up by 1.5% year over year.

That’s according to the Mortgage Bankers Association, which reported that originations of home equity loans and HELOCs rose from $2.10 billion in 2022 to $2.13 billion in 2023.

That’s a marginal change, according to Marina Walsh, vice president of industry analysis at the MBA.

“Home equity originations were relatively flat in 2023 compared to 2022,” Walsh said. “Even with evidence of easing credit availability, with originations activity moving to lower FICO credit scores, higher combined loan-to-value ratios, the closings to applications pull-through rate dropped, indicating that home equity lenders were doing more work for fewer loans.”

HELOC and home equity lending originations diverged last year, with average HELOC commitment volume at about $1.8 billion per company in 2023, down from $1.9 billion one year prior. For home equity loans, on the other hand, originations were at roughly $657 million per company last year, up from $428 million in 2022.

Notably, Walsh observed that despite the soft volume growth, outstanding debt in both HELOCs and home equity loans showed a meaningful uptick. By dollar volume, average weighted outstanding balances on HELOCs grew 4.7% from the beginning of 2023 to the end of the year, while average weighted outstanding balances on home equity loans were up 17.6% in the same timeframe.

Mortgage companies expect more of the same in the years ahead. The MBA reported that lenders expect HELOC debt outstanding to grow 2.3% in 2024 and 4.8% in 2025, while home equity loan debt outstanding is expected to climb 11.1% this year and 7.2% next year.

“Given the substantial amount of accumulated equity in real estate, there is still untapped potential for home equity lending for lenders and borrowers,” Walsh said.