California-based Pennymac Financial Services’s broker department, Pennymac TPO, has unveiled an exciting new home equity loan offering just as tappable home equity is nearing its 2022 peak.
“Pennymac’s broker partners can now offer their clients a home equity loan as a second lien option for accessing more funds, all while maintaining the low interest rate of their initial mortgage,” the company announced.
A home equity loan, also commonly referred to as a second mortgage, allows homeowners to borrow money by leveraging the equity in their home. This loan is typically received as a lump sum and repaid in monthly installments over a long term, often for up to 30 years.
This offering is specifically available for primary residences with fixed-rate term structures of 10, 15, 20, or 30 years.
Currently accessible in 11 states, the minimum loan amount is $50,000, and the maximum is $500,000, with an 85% loan-to-value (LTV).
Pennymac’s new home equity loan for brokers coincides with U.S. homeowners sitting on a collective $16.4 trillion of home equity in the third quarter of 2023. The tappable equity, which represents the amount that can be accessed after maintaining a 20% equity stake, has reached a near peak of $10.6 trillion, as indicated by ICE Mortgage Technology’s mortgage monitor report.
With mortgage rates climbing above 7%, cash-out refinancing, a popular method of accessing accumulated home equity when rates are lower, has become less appealing.
Despite having higher levels of home equity, borrowers are more inclined to secure a second-lien mortgage rather than forfeit a low rate on their initial mortgage through a cash-out refinance.
Pennymac’s latest 8-K filing with the U.S. Securities and Exchange Commission (SEC) on Monday reported an overall of $19 billion in total acquisitions and originations to date in the fourth quarter, including $16.3 billion in correspondent acquisitions, $1.6 billion in broker direct originations, and $600 million in consumer direct originations.
