Homepoint dives into HELOCs as home equity levels remain high

Despite increased competition, wholesale lender Homepoint has rolled out a new home equity line of credit (HELOC) product. The goal is to court more brokers at a time when home equity levels remain high. 

Available on investment properties, single-unit owner-occupied properties and second homes, Homepoint’s HELOC product allows eligible borrowers to access between $20,000 to $400,000 of their home’s equity as a line of credit, the Michigan lender said Monday. 

Provided that borrowers keep at least 15% equity in their home, they can get a HELOC through Homepoint with a five-, 10-, 15- or 30-year term and two- to five-year draw terms.

“This new home equity line of credit is another way we’re aiming to position mortgage brokers at the forefront of consumers’ minds when it comes to home affordability and maximizing the value of their home,” Phil Shoemaker, president of originations at Homepoint, said in a statement. 

A HELOC allows homeowners to access their equity without refinancing their primary mortgage. It works as a revolving line of credit that allows borrowers to withdraw as needed, and it comes with a variable interest rate. Once dominated by depository banks, nonbank lenders have joined the home equity lending space to take advantage of high home equity levels.

While equity among mortgaged homes dropped by about $1.5 trillion from its May peak, equity positions still remain strong, according to Black Knight. Home equity is still $5 trillion, or 46%, above-pre-pandemic levels. In turn, the average mortgage holder is still up by more than $92,000 compared to the start of the pandemic.

Among the nonbanks that have introduced HELOC loan products are Guaranteed Rate, United Wholesale Mortgage and loanDepot. California lender loanDepot most recently launched its HELOC, which allows homeowners to access between $50,000 to $250,000 of equity through a 10-year, interest-only line of credit, which is followed by a 20-year variable repayment term with no prepayment penalty.

Homepoint, which ranked as the 14th largest mortgage lender on Inside Mortgage Finance’s list, originated $25.95 billion in volume as of September 2022, down 65.7% from the same period in 2021.

Soaring interest rates and aggressive pricing from its rival UWM hit Homepoint hard. The wholesale lender reported a $44 million loss in the second quarter and shed about 75% of its workforce in a year to cut costs. 

Home Point Capital CEO Willie Newman acknowledged in its second quarter earnings call with analysts that “competitor actions have added to the challenges of a down origination cycle resulting in historical lows in market level margins.”

Homepoint will be releasing its third quarter earnings on November 10.