Home Equity’s Trend Toward Digital Will Only Get Stronger

Until recently, most of an FI’s home-lending volume originated in branches, and home equity was no exception.  

That’s changed at least in part due to the pandemic, when branches closed or restricted their operating hours – any discomfort borrowers and lenders may have had with remote interaction and digital delivery was put aside through necessity.  

The trend has continued as a result of digital’s growing more sophisticated and its embrace by a younger generation of home buyers. Fully online applications for home-equity products now represent close to a quarter of all volume (see chart), nearly triple what it was pre-pandemic. Over the same period, the branch’s share of home-equity volume has plummeted from roughly 75% before the pandemic to less than half now, and indications are the trend will only accelerate.  

The clear takeaway for traditional lenders is that they will have to take a page from the alternative providers whose entire business models are based on remote and digital delivery – the alternative is surrendering an increasing share of that business.