Keeping in touch with customers key to preparing for recapture, says Gehrke
One of the loan products that received significant attention in 2025 was the home equity line of credit (HELOC). As home equity reached all-time highs and record consumer debt piled up, HELOCs helped homeowners tap into that built-up equity.
Because mortgage rates spent much of the year on the high side, HELOCs made a lot of sense as consumers weren’t interested in refinancing record-low first mortgages to access built-in equity.
Even as rates have dropped into the high 5s early in 2026, it doesn’t mean the HELOC is going away. One mortgage expert said brokers can expect these loans to remain strong options in the new year.
Bruce Gehrke (pictured top), senior director of wealth and lending intelligence at JD Power, said home equity loans aren’t just for those with low-rate first mortgages.
“You come into the New York area, and there's a large majority of older homeowners,” Gehrke told Mortgage Professional America. “A good percentage of them own their own homes outright, but they can't come close to affording that property again in this market. So they're not going to move.”
A competitive market
One of the biggest shifts in the mortgage landscape is the source of these second-lien mortgage products. Gehrke notes that these were once dominated by large traditional banks.
Now, not only have independent mortgage banks added these products, but there are seemingly unlimited numbers of non-QM lenders ready to offer a wide range of second-lien options.
He stresses that brokers must keep in touch with their customers not only to hold off a surge in lending from big banks, but also to deter existing loan servicers from adding to their portfolios.
“With the current interest rate environment, you know, they're not refinancing either,” Gehrke said. “We've seen success in lending by the banks that have traditionally owned that product. A big difference going forward is that there's an active secondary market for HELOCs, for second liens, much more so, and much more competitive than in the past.
“Most of the mortgage banks and the servicers offer these products, and brokers can't be far behind that. They can't lose the differentiation by being focused only on the first loan. I think it is an important addition to what they do.”
Relationships and advice
One thing Gehrke stresses is that regional trends are often much different than national ones. So he believes it is critical for brokers to really understand the region of the country they’re operating in to advise customers appropriately.
“I think in order for them to really compete, it's about relationships and advice,” he said. “You have this whole area around HELOCs, second mortgages, if rates are going to stay within a range. I think, regionally, it is a different market. I'm in the northeast, and people just are not moving. They're staying still, and they do have significant equity, and there's just a lot of opportunity. It’s a great financial tool.”
Gehrke said it’s important to have access to a wide range of loan products, or your customers might not see you as someone who can meet all their lending needs. Having those products allows you to be a complete mortgage broker.
“I think if you don't have that ability, it narrows your opportunity to be viewed as somebody who is really a helpful advisor when it comes to home ownership and how best to leverage it,” he said. “I think for brokers, they need to move beyond simply looking at creating another transaction. There are other products out there, and you have to make sure you have the capability to play in that business.
“And I don't think they should minimize that, because I think that really completes who you are in the eyes of the consumer. Have a broader perspective on it, and not just be a single product provider and a transaction facilitator.”
It’s all part of the complete picture for a broker on how they’re going to compete against companies looking to take their potential business. Whether it is mega lenders, traditional banks, or servicers, brokers have to be proactive in building relationships with their past and current customers.
“I think you have a good understanding of how you're going to differentiate and compete,” Gehrke said. “That doesn't mean you can't compete against them, but you need to know how you're going to do that. I think brokers still have a tremendous opportunity locally, and I think the advantage to succeeding locally outweighs the efficiency of what's coming from the big platforms. That local presence that brokers tend to have is their competitive advantage.”
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