MeridianLink Report Forecasts HELOC Increases in 2025/26

By W.B. King

In 2024, homes sales reached a 20-year low, but new data from MeridianLink finds that 30% of home buyers are considering a home equity loan in 2025.  

Building on data culled from its 2022 home equity trends survey, the Costa Mesa, Calif.-based fintech, which provides automated digital lending solutions, polled roughly 1,500 homeowners earlier this year. “Nearly three in 10 (28%) American homeowners are considering taking out a home equity loan or HELOC in the next 12 months,” the survey found. “This marks a notable 7% increase compared to 2022, reflecting a shift in consumer sentiment despite lingering concerns about affordability, repayment risks, and knowledge gaps.”

In 2022, for example, only 21% of respondents said they were likely to take out a home equity loan. While that number has increased by nine points, affordability remains a considerable concern for 54% of homeowners who remain hesitant due to high interest rates (63%), worries about risking homeownership (22%), and uncertainty about repayment terms (18%).

“Homeowners recognize the potential of home equity lending, but many are still on the sidelines due to financial uncertainty and lack of education about their options,” said JP Kelly, SVP of Mortgage at MeridianLink. “This presents an opportunity for financial institutions to bridge the gap by simplifying the lending application process, improving education on home equity products, and offering more competitive, flexible options.”

Market Indicators

According to Business Insider, in April 2025, the average mortgage rate was 6.71% and median home values were up 2.7% year-over-year at $403,700. Fannie Mae estimates home prices will rise 4.1% year-over-year in 2025 and 2% in 2026. The Mortgage Bankers Association found that price growth is slowing to 1.3% year-over-year in 2025 and estimates that figure to be 0.3% in 2026. And the National Association of Realtors figures the median home prices will increase 3% in 2025 and 4% in 2026.

MeridianLink found the following factors prompting borrowers:

• 45% are motivated by home renovation and improvements.

• 16% want to invest in new properties.

• 16% want to consolidate debt.

• 11% seek to create an emergency fund.

• 5% want to pay down medical expenses.

  
  

When selecting a lender what matters most to borrowers is affordability, but other factors include: competitive interest rates (72%), lender reputation (43%), and convenience and personalization (41%). The most attractive variables for borrowers are speed of loan approval (15%), personalized service and guidance (15%), and digital application tools (11%).

Ask Questions, Have Answers

With 53% of homeowners rating their understanding of the lending market as strong in 2025, 23% still reported not fully understanding the process, which was an improvement from 2022 (38%). “Lenders have a valuable chance to bridge this gap. By offering clear, accessible resources, they can build trust — and turn more hesitant homeowners into confident borrowers,” the report stated.

For banks and credit unions, MeridianLink, which is celebrating its 25th year in business, suggests lending departments ask the following three all-important questions:

1. Are you leveraging automation and instant, decisioning rules to process home equity loans faster, minimize human error, and improve credit risk assessments?

2. Do you have the tools in place to provide borrowers with real-time loan status updates and clear, transparent communication throughout their journey?

3. Is your technology enabling you to provide personalized support and debt optimization solutions tailored to each borrower’s unique needs?

   
   

“Simplify application processes to speed up approval times and reduce errors. Enable faster time to fund through instant decisioning and automated workflows. Leverage data-powered credit risk assessments to make more informed lending decisions,” the report noted. “Offer integrated debt optimization to help borrowers manage their financial needs with personalized solutions. Provide real-time, personalized borrower engagement that keeps your customers informed and satisfied. Benefit from cloud-based, scalable technology that grows with your business.”