Scott CarpenterUpdated Thu, Jun 5, 2025, 4:57 PM 5 min readIn This Article:(Bloomberg) — Wall Street is cranking up the bond machine as US homeowners — finding that buying a new house is out of reach since mortgage rates started climbing in 2022 – are instead getting home equity loans and sprucing up their current properties.Most Read from BloombergICE Moves to DNA-Test Families Targeted for Deportation with New ContractThe Global Struggle to Build Safer CarsNYC Residents Want Safer Streets, Cheaper Housing, Survey SaysThe Buffalo Architect Fighting for Women in DesignUS Housing Agency Vulnerable to Fraud After DOGE Cuts, Documents WarnAdvertisement: Shop Top Mortgage RatesRoughly $18 billion of bonds, backed by consumer loans on everything from second mortgages to loans that get repaid from future home value, were issued last year, according to data compiled by Deutsche Bank AG (DB) and Bloomberg. That’s triple the amount in the year prior, and sales are on pace for a similar level in 2025.With a near-record $35 trillion tied up in US home equity, households are dipping into their housing wealth to pay for renovations and other purchases rather than buy new homes that would require them to switch into mortgages at higher rates. With sales of previously owned homes — and thus new loans — stalling, the home loan industry is paying attention.“They’re taking their mortgage-making factories and starting to use them to create home equity products,” said Gabe Rivera, co-head of securitized products at PGIM.Investment firms are scooping up the loans and then repackaging hundreds or thousands of them at a time into bonds of varying size and risk, a process known as securitization. This year, Atlanta-based Angel Oak Capital Advisors and New York’s Annaly Capital Management Inc. both issued their first-ever bonds secured by home equity lines of credit. In April, mortgage servicing giant Mr. Cooper Group Inc. joined the growing ranks with its first bond backed by second mortgages.Home equity-backed bonds are still a relatively small corner of the market, at least compared with the vast bond offerings for mortgages guaranteed by the quasi-government entities Fannie Mae (FNMA, FNMAS, FNMFO), Freddie Mac (FMCC, FMCCH, FMCCM) and their sister organization Ginnie Mae. Together, the trio are expected to crank out some $1.15 trillion of MBS this year alone, according to Citigroup Inc. estimates.Still, the field is growing. TPG Angelo Gordon estimates there’s a $2 trillion market for home equity products. And thanks to tighter lending standards and regulations, the debt also appears safer than in the 2008 financial crisis, when many borrowers in riskier loans fell into foreclosure.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P 5005,986.38 +15.57 (+0.26%)Dow 3042,506.05 +78.31 (+0.18%)Nasdaq19,557.20 +96.71 (+0.50%)Russell 20002,098.68 +0.20 (+0.01%)VIX17.27 -0.34 (-1.93%)Gold3,393.50 -5.70 (-0.17%)PortfolioSign in to access your portfolioSign inTop gainersNEGG Newegg Commerce, Inc. 8.25 +1.97 (+31.37%)NBIS Nebius Group N.V. 47.71 +8.32 (+21.12%)MDB MongoDB, Inc. 230.79 +31.06 (+15.55%)AG First Majestic Silver Corp. 8.32 +1.04 (+14.37%)OSCR Oscar Health, Inc. 16.26 +2.11 (+14.95%)Top losersPVH PVH Corp. 66.02 -14.85 (-18.36%)BF-B Brown-Forman Corporation 27.53 -5.70 (-17.16%)BF-A Brown-Forman Corporation 27.78 -5.34 (-16.12%)LYEL Lyell Immunopharma, Inc. 11.53 -1.94 (-14.40%)CIEN Ciena Corporation 73.71 -10.10 (-12.04%)Most activeAPLD Applied Digital Corporation 14.09 +0.84 (+6.30%)LCID Lucid Group, Inc. 2.1250 -0.1050 (-4.71%)NVDA NVIDIA Corporation 142.61 +0.69 (+0.49%)TSLA Tesla, Inc. 319.15 -12.90 (-3.88%)F Ford Motor Company 10.20 -0.03 (-0.34%)Earnings eventsTrending tickersTSLA Tesla, Inc. 319.14 -12.91 (-3.89%)APLD Applied Digital Corporation 14.16 +0.90 (+6.83%)MDB MongoDB, Inc. 231.34 +31.61 (+15.82%)MULN Mullen Automotive, Inc. 11.79 -4.31 (-26.77%)SI=F Silver Jul 25 36.00 +1.35 (+3.90%)Top economic eventsPowered by Money.com - Yahoo may earn commission from the links above.