Home Equity Lending News

Home Equity Yields Continue to Escalate

Yields on home-equity assets held in bank investment portfolios have skyrocketed an average of 289 basis points over the past year. Still, yields are far lower than on loans headed to the securitization market.

During the second quarter, yields on home-equity assets at banks averaged 6.78 percent, according to a HELN analysis of earnings data from six publicly traded bank-holding companies that report yields. The average was not weighted.

Returns on home-equity investments increased by an average of 50 BPS from the first quarter. The escalation was more jarring compared to one year previous, when average  yield was just 3.89 percent.

Earning the highest yield of all banks on its home-equity portfolio during the second quarter was Huntington Bank: 7.42 percent. Fifth Third followed at 7.39 percent, then Citizens Bank , where the yield was 7.38 percent.

Compared to the first quarter, Fifth Third’s yield was up 92 BPS — more than any other lender. Bank of America Corp.’s 61-basis-point quarter-over-quarter increase was second, then 46 BPS at both Citizens and Truist.

Citizens saw its second-quarter home-equity yield soar from one year prior by 411 BPS — the most of any bank analyzed. Fifth-Third followed with a 3.58 percentage point year-over-year increase, then 298 BPS at Huntington. In the first-quarter yield analysis, Citizens also led the year-over-year gain, while Huntington was No. 2.

Yields on bank home-equity portfolios lag behind yields on loans backing new home-equity issuances. An analysis by HELN of home-equity securitizations through mid-year found that the weighted-average yield on the transactions was 10.54 percent.