dv01 and Fitch Ratings Introduce Revolutionary HELOC Benchmark for Investors

dv01 and Fitch Ratings Launch HELOC Benchmark



In a compelling move set to revolutionize the second lien mortgage market, dv01 and Fitch Ratings introduced the Fitch-dv01 HELOC Benchmark on July 15, 2025. This innovative benchmark captures approximately 80% of the rated Home Equity Line of Credit (HELOC) issuance, providing unprecedented insights that will undoubtedly improve credit performance analysis and understanding of borrower behavior.

Background of the HELOC Market



Over recent years, the demand for HELOCs has surged dramatically, with balances reportedly increasing by 9.7% year-over-year to $359.9 billion in 2024. The driving forces behind this growth include improved borrower credit quality, rising home values, and active origination by both bank and non-bank lenders. Despite the booming market, investors have struggled with fragmented data and inconsistent performance metrics, making it difficult to assess credit quality effectively. The introduction of the Fitch-dv01 HELOC Benchmark is poised to change that.

Features of the Benchmark



Developed through a collaborative effort between dv01, a leading capital markets fintech known for its groundbreaking innovations and loan-level transparency, and Fitch Ratings, one of the premier global credit rating agencies, this benchmark is a significant leap forward in mortgage data analytics. The benchmark consolidates performance metrics across various issuers, thus standardizing data reporting and enhancing transparency. It provides investors and issuers with reliable insights on critical areas, including credit quality, prepayment trends, and borrower behavior. Notably, it is accessible via dv01's web application and data feed, facilitating ease of use.

According to Perry Rahbar, the founder and CEO of dv01, this benchmark aligns with their overarching mission to elevate the level of transparency within structured credit markets. By offering a consistent view of risk and empowering issuers to compare their platforms against broader market trends, they are equipping stakeholders with the necessary tools to make informed decisions.

Comprehensive Data Inclusion



The Fitch-dv01 HELOC Benchmark is extensive; it encompasses more than 144,000 loans collectively worth $11.2 billion in original balances, showing robust analytical depth. The average outstanding loan balance stands at approximately $66,200, with a cumulative loan-to-value (CLTV) ratio of 67.5%, indicating the proportion of borrowed funds compared to the property value.

Further data points reveal that the 30+ day delinquency rate is currently at 1.9%, with a weighted average FICO score of 737—a measure of borrower creditworthiness. Prepayment speeds are also noteworthy, with one-month constant prepayment rates (CPR) at 21.6% and six-month CPR at 19.1%. Default rates remain exceedingly low, at 0.2% for one month and 0.5% for six months.

Analysis of borrower profiles highlights significant discrepancies. Borrowers with FICO scores below 700 account for 26.5% of the total outstanding balance yet contribute to 58% of delinquencies, revealing vulnerabilities that investors should consider.

Expanding Data Coverage



As more transactions integrate with the dv01 platform, the benchmark's coverage is anticipated to grow, offering an increasingly comprehensive view of the HELOC landscape. The introduction of this benchmark complements dv01 and Fitch's existing suite of mortgage benchmarks, which already includes datasets for Non-QM, Prime Jumbo, and Closed-End Seconds, thereby enhancing the overall capability of their co-branded benchmarking initiative.

Fitch Ratings’ Managing Director Kevin Kendra emphasized the critical nature of consistent loan-level performance data in an expanding second lien market, highlighting the benchmark's role in offering clarity for investors and issuers evaluating risk among an evolving HELOC landscape.

Conclusion



The launch of the Fitch-dv01 HELOC Benchmark marks a pivotal advancement in the structured credit landscape. By providing standardized, accessible data that facilitates deeper insights into borrower behavior and credit performance, this benchmark is set to empower investors and help stabilize a crucial segment of the mortgage market. dv01, with its commitment to technological innovation and transparency in finance, alongside Fitch Ratings, continues to deliver essential tools that bring clarity to complex financial data. This collaboration strengthens their positions as leaders in the financial services sector, committed to fostering a transparent and efficient market.

Topics Financial Services & Investing)

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