Home equity lenders aren’t just competing with each other, but also with online providers of personal loans. All indications are that the speed, convenience, and generally superior digital experience offered by fintech lenders in the unsecured space is more appealing to consumers. Consumers don’t much care that unsecured personal loans typically carry higher interest rates than does secured home equity credit.
A pair of studies from J.D. Power — one focusing on HELOCs versus personal loans and the other on the rapidly growing personal loan business — show a HELOC industry pitting chiefly traditional lenders against digitally-savvy unsecured fintech lenders that offer money quickly.
Patience may be a virtue, but no one markets on that point. Among new HELOC borrowers surveyed, two-thirds considered alternative products when shopping for their equity line, according to the research. This is up substantially from previous years. Younger HELOC borrowers surveyed are even more likely to consider alternatives to HELOCs, including personal loans, credit cards, and cash advances.
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