The rise of HELOCs: What it means for originators in today’s market

As interest rates remain elevated compared to historic, pandemic-era lows, many homeowners are rethinking how to access cash without giving up the favorable rates they locked in just a few years ago. For originators, that shift is creating a clear opportunity. Demand for home equity lines of credit (HELOCs) is gaining momentum, as borrowers seek flexible ways to tap into home equity while keeping their existing first mortgages in place.

In today’s market, HELOCs have evolved from a secondary product into a primary revenue driver for originators. From consolidating higher-interest debt to funding renovations and investment opportunities, borrowers are turning to home equity to support longer-term financial goals. 

To better understand how these trends are taking shape in practice, I spoke with Fredrik Megerdichian, President of Icon Mortgage. Together, we explored borrower demand, how HELOCs are being integrated into product strategies, and the overall outlook for activity through 2026.

What’s driving HELOC demand today

The fundamental driver of the HELOC trend is simple: interest rates and record-breaking home equity. With millions of Americans locked into mortgage rates below 4%, refinancing can be a tough sell. Simultaneously, homeowners today hold nearly $35 trillion in total home equity and roughly  $11 trillion in tappable home equity — a staggering figure that represents a level of financial security they’ve never had before.  

For originators, that dynamic is showing up in the types of conversations they’re having with clients, as more borrowers look for ways to access cash without giving up their existing first mortgages. Megerdichian noted that much of that demand is tied to borrowers looking to consolidate higher-interest debt, often using home equity to lower monthly payments and manage more expensive obligations.

At the same time, borrowers are expanding how they use home equity, creating more opportunities for originators to support both near-term needs and longer-term goals. Megerdichian observed this trend toward expansion: “We are seeing a tremendous amount of interest from borrowers to buy more property using those funds and to also renovate,” highlighting how these products are being used as proactive financial tools. In some cases, that extends to major life expenses as well, as borrowers may use home equity to cover large costs that might otherwise require higher-cost financing.

Where HELOCs fit in today’s originator toolkit

For originators, this isn’t a signal to wait for the market to “return” to old patterns. Instead, it’s an invitation to master a different set of tools. As borrower needs continue to shift, HELOCs are providing originators greater flexibility to broaden their offerings and meet a wider range of clients. Rather than relying solely on traditional refinancing, many are using HELOCs to expand their product mix and stay engaged with clients when markets may otherwise be quiet. 

What stands out in practice is how consistently these products are coming up in day-to-day activity. Megerdichian noted that this flexibility is resonating with borrowers and driving consistent interest. “Second liens have become very big part of our everyday transactions,” he said, adding that “every day there’s a call inquiry about these things.”

That steady interest also helps originators address needs that do not always fit neatly within traditional lending standards. HELOCs can be a strong fit for self-employed borrowers, entrepreneurs, and others with more complex financial profiles. When paired with non-QM solutions, they can help expand access to capital for borrowers who may not qualify through traditional banks.

Outlook for HELOC activity through 2026

As we look toward the next 6 to 12 months, the outlook for HELOC activity remains steady, even amid ongoing rate uncertainty. That shift also creates new opportunities for originators to reconnect with past clients and reintroduce lending solutions that may not have made sense in a higher-rate environment.

Megerdichian expects that demand to hold, regardless of marginal rate fluctuations. “If rates do drop, I think it will spark even more demand to borrow,” he explained. Lower rates would decrease the cost of the “draw” on a HELOC, making it even more appealing for homeowners to pull the trigger on those delayed renovations or property investments.

The consensus among industry leaders is that we have moved past the era where the HELOC was a “secondary” or “emergency” option. It has transitioned into a cornerstone of the modern lending landscape, likely to remain a dominant force through 2026 and beyond.

Leading with Value

The rise of the HELOC is a sign of a maturing, equity-rich housing market. Homeowners are no longer looking for the simplest way to get a lower rate; they are looking for the smartest way to manage their total household wealth.

For originators, the opportunity lies in education and proactive outreach. By utilizing second-lien options and non-QM flexibility, you are positioning yourself as a vital resource in a complex economy. The $11 trillion in equity is a massive opportunity, but it requires an originator who knows how to unlock it. Those who embrace this shift today will lead the market tomorrow.

Tom Hutchens is the President of Angel Oak Mortgage Solutions.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners. To contact the editor responsible for this piece: [email protected].