One of the main sources of wealth among American families is homeowner equity. According to a report from the Federal Reserve1, household net worth in this country rose to a new record, hitting $98.74 trillion. But what does record-breaking homeownership mean in today’s world and how will it affect your financial institution? Increasing wealth from homeownership is positive for our economy, but one lingering concern is rising interest rates and increased home prices. We know that these numbers are projected to rise which could change consumer buying habits, i.e. homeowners may opt to renovate their home rather than sale and purchase a new one. By increasing your focus on home equity lending, you can provide your customers with options that may benefit them and their current situations.
When it comes to lending in today’s world, home equity loans are at their prime. They offer borrowers lower interest rates, little to no closing fees, and the ability to increase their cash flow for larger expenses like paying off credit cards, home improvement projects, or paying for college education. With more Americans tapping into their home equity, it’s no surprise that home equity lines of credit (HELOCs) and home equity loans are on the rise. According to a report conducted by TransUnion2, approximately 10 million consumers are expected to originate a HELOC between 2018 and 2022. This would more than double the 4.8 million HELOCs originated in the previous five-year period (2012-2016).
continue reading »