Demand for home-equity loans and lines of credit appear to be ebbing across New Hampshire.

Last year, local banks saw a dramatic surge in both home equity lending lines, as homeowners shifted away from mortgage refinancings due to higher interest rates and toward other means of tapping into the rising value of their homes.

Citizens Financial Group, for instance, saw its total home equity lending business soar to $254 million in 2022, up 90 percent compared to 2019, just prior to the pandemic, according to data from The Warren Group, publisher of The Registry Review.

Smaller institutions in the Granite State also saw big jumps in their home-equity loan and HELOC activity in 2022, such as Meredith Village Savings Bank, whose home-equity loan and credit lines skyrocketed from a combined $5.7 million in 2020 to $20.8 million in 2022, up more than 260 percent, according to data.

But in the first half of this year, there was a noticeable decline in home equity loans and HELOCs.

Rhode Island-based Citizens Bank, which for years has been the state’s top home equity lender, saw its business in the first half of 2023 fall to $195 million, down 23 percent from the same period in 2022, according to data.

Other banks have followed suit.

TD Bank, which over the years has consistently ranked No. 2 in home equity lending in New Hampshire, saw its home-equity loans and lines of credit fall by 25.6 percent in the first half of 2023, compared to the same period last year.

Smaller New Hampshire-based institutions that have experienced a fall-off in home-equity lending in the first half of 2023 include MVSB (down 33.1 percent compared to 2022), Bank of New Hampshire (down 45 percent), Massachusetts-based Digital Federal Credit Union (down 3.8 percent), Mascoma Bank (down 4.9 percent), and Merrimack County Savings Bank (down 31.7 percent).

Some Deterred by Rates

Behind every statistic is a separate story.

Some institutions have larger home equity lending businesses in general, while others have much smaller businesses by design.

Meanwhile, some banks still have a larger book of home equity business than they did before the pandemic, while others have a smaller business compared to their pre-pandemic numbers.

But the bottom line: Most institutions in New Hampshire have seen a fall-off in home equity loans and HELOCs in the first half of 2033, compared to the first two quarters of 2022, data shows.

Among local bankers, the main reason cited for the home equity decline: rising interest rates.

“Even those home-equity [products] become more prohibitive when rates keep going up,” said Ron Magoon, CEO of Franklin Savings Bank, which saw its home-equity lending lines fall by 28 percent from 2021 to 2023, according to The Warren Group. “That’s one of the reasons you’re seeing a decline.”

Rising interest rates last year led to a dramatic decline in refinance deals across the state and nation, as homeowners with previously lower rates opted to stay put and not touch the terms of their mortgages.

Rocket Mortgage, which has long dominated the refinancing market in New Hampshire, saw its statewide refi-business balloon to $741 million in the first half of 2021, when many people were hunkering at home during the pandemic and tapping into the value of their homes to pay for renovations and other expenses.

But Rocket’s in-state refi business has since plummeted to $105 million in the first half of 2023, or by 85.8 percent since its 2021 peak.

Many Still Seek to Tap Equity

While eschewing cash-out refinance deals, many homeowners have still wanted to tap into the equity value of their homes for various reasons, whether for renovations or for other purposes, and so they turned to home equity loans and lines of credit, according to bankers interviewed for this story.

Home equity loans, with rates in the 9 percent to 10 percent range, and HELOCs, with rates around 8.5 percent, may have higher interest rates than today’s purchase mortgage rates that hover above 7 percent.

But they don’t involve changing the historically low mortgage rates that many homeowners secured before recent Fed interest rate hikes.

Marcus Weeks, president of MVSB, said the interest in home-equity products is still strong – just not as strong as last year.

Indeed, data shows Meredith Village’s home-equity lending business, at $13.9 million in the first half of 2023, is still way above the $5.7 million in business it did in the first half of 2020.

“We’re seeing a lot of [home equity] applications,” said Weeks, whose bank has traditionally maintained a strong home equity lending business.

Besides tapping into the value of homes for renovations, many homeowners like having HELOCs, in particular, for peace-of-mind reasons – just in case they’re hit with large expenses, such as the need for a new car or home roof.

Mark Danahy, senior vice president at Meredith Village, said there may be more homeowners with approved HELOCs these days, but not all of them are actually using the lines of credit, sometimes set as high as 80 percent of the value of a home.

In 2017, 45 percent of Meredith Village’s lines of credit were being utilized by homeowners, but so far this year only 30 percent of the credit lines are being used, he said.

That indicates many people indeed are getting the HELOCs for peace-of-mind reasons.

“It’s there if they need it,” said Danahy.

But the low usage could also be tied to other factors, such as today’s long waits before contractors can start home-improvement projects for homeowners.

“They’re attractive [products] for homeowners,” said Danahy. “Their use has declined, but the interest in them has increased over the years.”