Home equity in the United States hit record levels this year, exceeding $29 trillion in the second quarter, according to the Federal Reserve.

That represents a gain of nearly 28% in equity year over year, with the average homeowner gaining about $60,200 in equity. But sky-high inflation and a clunky, outdated lending process have made using that equity difficult for many homeowners.

These opposing forces are creating increased demand for financial products — especially home equity lines of credit (HELOCs) — that allow homeowners enjoying near-unprecedented home equity gains to tap into that new equity while banks struggle with an outdated, largely paper-based application process to approve new HELOC and home equity loan requests.

That’s why companies like Blend Labs Inc. (NYSE: BLND) are working to digitize the home equity lending space. The cloud-based software platform turns a slow, 30-plus step process from application to funding into a quick process that can be completed in about three steps.

HELOC volume surged almost 50% in the first half of the year, as the revolving line of credit with a variable rate and, usually, no origination fee is more attractive than a cash-out refinance for borrowers who locked in historically low rates on their original mortgage in the last few years.

Homeowners are looking to leverage this spike in home equity to consolidate high-interest debts into lower-interest home equity lines of credit, make home renovations that could increase equity even further or use as a down payment on a second property to build up a real estate portfolio.

That increase in HELOC volume is likely also thanks to the introduction of digital or tech-based solutions to the mortgage space that make it easier for customers to shop around for financial products, compare rates and offers and complete the application process.

Traditionally, home equity lending has been slow to modernize, relying on a paper-based process with an average of 30 or more steps between application and funding that can take over 45 days to close. A lot of this is because of the clunky manual process on the bank’s side that leaves the customer waiting while a banker reviews the application, verifies assets and income, pulls credit, requests documents and so on.

To meet the increasing demand, banks with the help of fintechs are finally taking this opportunity to update and digitize that process so homeowners can tap into their equity faster and more easily. Figure Technologies Inc. (NYSE: FACA.U), for example, is using blockchain technology to record and exchange data about a loan, automating much of the manual process that used to be needed. Meanwhile, Button Finance is using artificial intelligence to speed up the decision-making and funding process for home equity loans.

Blend Instant Home Equity is the latest from a company determined to bring digitization and tech-based solutions to the real estate and mortgage industries. The new product incorporates some of Blend’s existing software, like its Blend Income Verification and remote online notarization platform, to create a faster and more cost-effective alternative to home equity lending.

The automated end-to-end product integrates identity and income verification, property appraisal, title, decisioning and notarization to cut the time and costs associated with processing a home equity loan application. For bankers, this makes it possible to generate a personalized offer for homeowners, approve it instantly and close it in a matter of days rather than weeks. For consumers, this means they can now easily access their home equity for things like debt consolidation and more.

Unlike other fintechs in the home equity lending space, Blend uses modular architecture that makes it easy to develop new banking products that all integrate into one platform. This allows banks to digitize more of their services without relying on multiple pieces of software that may not integrate with each other. Banks incorporating the new Blend Instant Home Equity product can easily add its mortgage and other lending software. That ecosystem approach seems to be working, too, as Blend reports that 71% of its current customer base uses two or more Blend products.

As competition in home equity lending heats up, banks are going to need digitization tools like these to handle larger volumes of applications while avoiding the long wait times that could drive customers to competing lenders.

Powering the Future of BankingBlend is the infrastructure powering the future of banking. Financial providers—from the largest banks, fintechs, and credit unions to community and independent mortgage banks—use Blend’s platform to transform banking experiences for their customers. Blend powers billions of dollars in financial transactions every day.

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