"Debt consolidation has emerged as the dominant driver of home equity borrowing and a key theme that loan officers reported 81% of loan officers told HomeLight that they've seen a spike in homeowners borrowing against their equity, with 29% qualifying this as a significant increase and 52% calling it a slight increase. In 2025, 87% of loan officers told HomeLight that debt consolidation was the main reason borrowers accessed their equity through home equity lines of credit (HELOCs)."
"More than one-third of lenders said buyers remain fixated on the possibility of rates dropping to 5.75%, despite current averages hovering in the mid-6% range. Lenders, however, are cautioning against playing the waiting game. Waiting and timing rates is a fool's gamble. Buy the home before it gets even more expensive. The opportunity to get a lower payment will come with the next rate cycle. Home price declines are statistically very uncommon, loan officer Jeff Abel said."
"The primary concern for the majority of potential buyers is affordability. Even though rents are high, renters have nice homes with amenities in great locations. They find it unjustifiable to increase their housing payment by 50% or more to buy a home that needs work and that is far from their current life activities, said April Blackwell, a North Carolina loan officer."
Debt consolidation has become the dominant driver of home equity borrowing, with 81% of loan officers reporting a spike in homeowners tapping equity and 87% saying debt consolidation was the main HELOC purpose in 2025. Many borrowers are delaying moves while waiting for mortgage rates to fall toward 5.75%, even as averages remain in the mid-6% range. Lenders warn that timing rates is risky and advise buying before homes become more expensive. Affordability varies by profession, favoring health care and tech workers, while retail, transportation and hospitality workers are often priced out. First-time buyers earning under $75,000 face high failure rates. Policy uncertainty includes planned sales of Fannie Mae and Freddie Mac stock.
Read at www.housingwire.com
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