'It's not the same product they knew five or 10 years ago': mortgage exec
A surge in home equity, combined with an increase in consumer debt, is starting to fuel an increase in applications for home equity lines of credit (HELOCs). One loan professional believes that surge could help brokers forge relationships with customers for when they’re ready to buy in the future.
Affordability issues in the market, combined with low interest rates on existing mortgages, may keep potential homebuyers from jumping into the purchase market. However, brokers may be able to help those customers who already own a home deal with increasing expenses by tapping into growing equity in that property.
Anthony Stratis (pictured top), vice president of lending partnerships at Figure, sees a surge in home equity loans as an opportunity for brokers to expand their customer base at a time where purchase loans have slowed.
“Obviously, demand for loans in general is subdued,” Stratis told Mortgage Professional America. “Purchase markets are down, the refi markets are down. All the conversations that I'm having with brokers typically revolve around second liens and HELOCs. And I tell them that a HELOC is a really elegant way to meet a given customer's need today and get cash in their hands.
“But more importantly, the beauty of it is you're establishing a relationship that will help you get a cash-out refi when the time comes. And so, it's one of those rare opportunities where you can truly meet a customer need now, get paid for doing that, and at the same time plant the seed for the next transaction that's going to happen.”
Stratus said mortgage companies are often able to help brokers close home equity loans in a fraction of the time as a refinance, for less in closing costs.
“The reason that HELOCs were never sexy back in the day, five or 10 years ago, is because the typical loan officer wasn’t going to bother with an $80,000 HELOC,” Stratis said. “They still have to do all the paperwork and all the underwriting. It’s as much work as a refi, and they were going to get paid $100 or $200.
“Nowadays, these companies offer the least amount of effort required from a loan officer to actually price one of these and underwrite. They can have it done in days, with little to no effort, and make a customer pretty happy. It’s not the same product they knew from five to 10 years ago.”
HELOCs easier, cheaper than a new home purchase
Stratis notes that in a lower-rate market, it would be easy for customers looking to upgrade their houses to make this decision.
“In a more traditional market, if you go back six or seven years, when rates were fairly consistent, you know the easier answer,” Stratis said. “If you needed to go from a two-bedroom to a three-bedroom, you would sell your current home and buy a new one.”
With the markets continuing to be volatile due to the recent Trump administration tariffs and many homebuyers having locked-in low rates from the pandemic, the decision to buy a new home may not be the best option.
Sarah DeFlorio of William Raveis Mortgage urged brokers to prioritize affordability over chasing rates, as market swings disrupt traditional patterns. https://t.co/8RW41W0Ka0
— Mortgage Professional America Magazine (@MPAMagazineUS) April 15, 2025
“With the market being what it is, there’s a real affordability issue out there where not only do you have to pay an increased price on the property you’re buying, but the mortgage rate is probably double,” Stratis said. “So, on a payment basis, it could be two times what it was. The most cost-effective answer to get another bedroom might be to do an addition on your home. And that’s where the HELOC comes in.”
The speed at which these HELOCs can be closed also saves money for the customer, with some of them able to be closed in a matter of days.
“We typically can get things done in five, six days, which is pretty attractive when somebody has a need,” Stratis said. “But we've also been able to originate these loans through an automated underwrite, which is very cost-effective. The origination costs are not high, so we've seen a lot of demand in first lien territory.”
Creating a relationship for the next loan
Stratis said that nobody is really sure when the current volatility in the market will end, and what rates will look like when that happens.
“I'm not sure anybody knows the answer,” Stratis said. “On the one side, volatility widens spreads, which makes all products more expensive. That applies to traditional mortgages, non-QM, and HELOCs. But I am not sure which way this is going to play out. Having tariffs causes home improvement in general to be more expensive theoretically, although we haven't seen that play out equally in these types of markets.
“Traditionally, there's a flight to quality. And when that happens, rates go down. So, you've got two opposing forces, and I'm not sure how it will play out.”
In the meantime, while hesitant buyers sit on the sidelines, debt and other major expenses pile up. Stratis sees an opportunity for brokers to step in and help these customers meet short-term needs instead of a full refinance or a home purchase.
But he believes customers won’t forget who was there to help them when they needed it.
“I don't think that consumers are going to forget that you were the one who was there to help them now with an option, and I think that's the real power of second liens,” Stratis said. “You have a supportive market and a ton of equity. You are helping them meet their life needs, and you're also establishing a relationship for when they are ready for a purchase, whenever that comes.
“Honestly, anytime you can have a meaningful conversation with a consumer and provide a solution, you are planting a seed for something in the future, and that's where I think we get most of our demand.”
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