How credit unions can capitalize on the surge in home equity

Skyrocketing property values during the pandemic have left U.S. homeowners with historically high levels of home equity. Last year, the average homeowner had $300,000 in tappable equity, according to data from CoreLogic.

As interest rates rise but home prices remain stubbornly high, many Americans will likely choose to remain in their current home for the foreseeable future. Instead of refinancing, many will opt for less rate-sensitive home equity products, especially if they’re looking to renovate. In fact, TransUnion forecasts predict that home equity originations will increase by 24% in 2023.

These trends present a massive opportunity, and this year, credit unions are shifting their lending strategies to focus on home equity loans. According to CUESolutions provider Cornerstone Advisors’ 2023 “What’s Going on in Banking” report, home equity loans are among the top lending priorities for credit unions, with 59% focused on home equity this year. The only lending category that ranks higher than home equity in 2023 is auto loans.

However, consider the process for getting approved for an auto loan compared to a home equity loan. Some credit unions offer online auto loan applications, and applications can often be approved within the day or a few business days at most. In some cases, a member could apply online, get approved and receive funding all within the same day.

 

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