Rocket is the latest to launch a new home-equity product

Rocket Mortgage is the latest in the ranks of independent mortgage banks that are introducing home-equity products this year.

The Detroit-based lender announced a new home-equity loan on Monday, which is already available to consumers, according to a company spokesperson. 

Lenders are turning to home-equity products as higher mortgage rates cause refinance volumes to fall 83% year over year, based on latest Mortgage Bankers Association numbers. At the same time, homeowners have almost $28 trillion in tappable equity today — gaining $1.7 trillion compared to late 2019, according to the Federal Reserve Bank of New York — which mortgage companies hope clients will utilize to reduce other higher-interest-rate loans. 

“Our goal is to consistently create financial products that help our clients achieve their goals. In the current market, short-term interest rates have risen sharply — making it much harder to pay off credit card debt,” said CEO Bob Walters in a press release. 

Rocket’s customers can apply for a fixed-rate loan between $45,000 to $350,000, while maintaining at least 10% of the equity in their home.

Detroit-based Rocket is at least the fourth nonbank to introduce either a home-equity loan or line of credit in 2022, joining rivals, such as Guaranteed Rate and loanDepot, who earlier this year unveiled new plans for HELOCs. With mortgage rates currently over 2 percentage points higher than averages from a year ago removing refinance incentive for most homeowners, Rocket’s move points to the extent lenders have pivoted toward product diversification in 2022.  Earlier this year, loanDepot rolled out plans for a new real-estate services unit named mello, while Guaranteed Rate moved into the personal-loan space. 

In July, Rocket revealed an upcoming rebranding and marketing push of the Truebill personal-finance app, which it acquired late last year. The company said it would open up premium access to the app, renamed Rocket Money, to its servicing customers, while current Truebill users will be offered the opportunity to apply for Rocket’s mortgage and auto-loan products. 

At the same time that lenders diversify, the decrease in volume has led to a steady stream of staff reductions at mortgage businesses nationwide, including Rocket Cos., which is set to announce second-quarter earnings on August 4.