Rocket Mortgage has rolled out more competitive home equity products as lenders up their offerings in the burgeoning space.
Customers can now obtain 15- and 30-year home equity loans for amounts up to $500,000, compared to competitors’ typical $350,000 home equity limits, Rocket said. The new options come in response to feedback from the lender’s broker network, said Mike Fawaz, executive vice president of Rocket Pro TPO.
“The biggest separation that we have, in my opinion, from the rest of the industry is really paying attention to our broker partners and listening to feedback,” he said.
The executive attributed Rocket’s higher home equity limit to the company’s strong financial backing. Rocket also is allowing customers to use automated valuation models in lieu of appraisals for loans up to $400,000, a seldom-available limit, according to Fawaz.
Homeowners hold deep reservoirs of tappable home equity, but are withdrawing that capital at a lower rate than the decade prior, according to a report by ICE Mortgage Technology last month. ICE however suggested anticipated Federal Reserve interest rate cuts should lead to increased home equity lending.
Rocket executives have been bullish on home equity activity in its recent earnings reports, and Fawaz Tuesday echoed those thoughts. The company doesn’t disclose its home equity production volume, but claims to be the industry’s largest provider of closed-end second liens after it began originating those loans in 2022. A representative for Rocket Tuesday said its home equity production has grown 70% year-over-year.
The lender has also securitized billions of dollars worth of closed-end second loans this year, including a recent securitization including 6,320 loans with a total balance of approximately $547 million. Rocket has issued eight securitizations of closed-end loans this year, according to Fitch Ratings.
The Detroit giant’s closed-end second transactions come amid more securitizations of home equity lines of credit loans by Wall Street players. Kroll Bond Rating Agency anticipates $16 billion in closed-end second lien volume next year, driven in part by more of those loans with longer-term fixed rates.
