LoanDepot Q2 Revenue Jumps 18% on Home Equity Expansion

LoanDepot’s recent expansion into home equity lending paid off in the second quarter, driving unit volume growth of 25% and revenue growth of 18% compared to the first quarter, the company said in a Tuesday (Aug. 4) press release.

Home equity lending was “a central driver” of the company’s gains in the second quarter, and it represents “a significant expansion opportunity,” loanDepot Founder and CEO Anthony Hsieh said during a Tuesday earnings call.

The home equity lending market is supported by about $35 trillion of U.S. homeowner equity; represents a potential market size that is more than double that of total mortgage debt outstanding; and gives loanDepot an opportunity to serve homeowners it has long served through traditional refinance products, Hsieh said.

“In a higher rate environment, however, home equity products can allow qualified buyers to access liquidity while preserving an attractive first mortgage rate and may offer a more compelling value proposition than higher cost alternatives such as unsecured personal loans, credit cards and certain small business refinancing products,” Hsieh said.

LoanDepot made its move into home equity lending through its 5X5 HomeLoan product, according to the release.

When announcing 5X5 HomeLoan in an April press release, loanDepot said that it partnered with blockchain technology firm Figure Technology Solutions to offer the product. The company said 5X5 HomeLoan is fully digital, delivers approval in as little as five minutes and most fundings in five to seven days, and offers loan amounts from $25,000 to $750,000.

In current market conditions, while higher interest rates are reducing demand for both purchase and refinance mortgages, homeowner equity levels are driving demand for cash-out refinance and home equity products, loanDepot said in an investor presentation released Tuesday.

During Tuesday’s earnings call, Hsieh said: “We believe that when rates fall and traditional refinance activity returns, home equity will remain an attractive product for a large segment of the market, particularly those customers with ultra-low pandemic-era interest rates that are unlikely to be in the market for a traditional refinance. Home equity lending broadens our addressable market and complements our traditional purchase and refinance business.”