By David Glehan, director, and Amanda Hopkins, rating specialist, Standard & Poor's

The closed-end second (CES) lien securitization market continues to grow dramatically, offsetting the trend of borrowers retreating from HELOCs, which do not provide the same interest rate or payment certainty as CES loans. To alleviate short-term interest rate concerns, some lenders are now originating HELOCs with the interest rate fixed for the first year rather than adjusting based on the prime rate. Further, some HELOC lenders are giving borrowers the option to convert all or a portion of the drawn amount to a fixed rate rather than adjust based on the prime rate.

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