“We pay up to 2 1/2 points on our HELOCs,” he said. “We recently enhanced our HELOC to allow up to a $1 million HELOC, and 2.5% on a $1 million deal, that’s $25,000. You do four of those, that’s $100,000 a year.”
He noted that homeowners are sitting on approximately $35 trillion in home equity. Many of those homeowners are deciding to stay put and fix up what they own, which is becoming more necessary as housing stock continues to age.
Davis said more than 50% of equity originations are renovation loans, with close to $600 billion in renovation projects expected in 2026. The market extends well beyond primary residence owners, with 19 million investment properties whose owners are not willing to surrender sub-3% notes to fund rehabs or new deals.
“People are staying in their homes longer,” he said. “They can’t afford to trade up. They don’t want to give up that low rate. They’re tapping into their equity.”
Meeting borrower needs
For brokers who still aren’t offering second lien products, Davis said their customers are likely to just go elsewhere.
