Lending Perspectives: Are home equity loans the next great growth opportunity?

Mostly overlooked since the Great Recession, they might pick up the slack for lagging parts of your portfolio.

For many credit unions, 2021 has been a tough year for loan growth.

First, the pressure to make loans has never been higher. As a lender, I’ve lived through three or four recessions (I inaccurately predicted seven of them), so I know that they tend to bring in deposits. Yet we’re not in a recession, and we don’t have money flooding in from a flight to safety. The flood of deposits that banks and credit unions have seen comes from all the stimulus money—so much so, it’s been impossible to lend it fast enough.

Secondly, it’s been an ugly year for auto lending, especially on the indirect side. The manufacturers’ use of 0% financing combined with interruptions to the supply chain for new vehicles due to the chip shortage has left Ent’s indirect portfolio virtually flat in the last 15 months. What a huge change over the previous six to seven years when there were regulatory, management and board concerns over the strong growth in indirect lending portfolios!

Another observation about the lending business, this time from our commercial/member business lending area, is about the level of competition for commercial loans. Admittedly, there is a sense of nervousness in the market over retail and office space. Thus, solid owner-occupied real estate loans, medical and professional loans, and multi-family properties have almost unlimited competition chasing them. Ent has experienced a level of competition we never could have anticipated!


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