There’s no doubt that the resurgence in home equity is continuing, but there are opportunities for lenders to make improvements as the digital channel becomes even more important. That’s especially the case as new entrants introduce seven-day cycle times, full-funding draw requirements and other features. At the same time, lenders will need to proceed with caution amid a notable shift in the demand for credit from higher-risk borrowers. Furthermore, HELOC usage rates remain a challenge for most originators.
Here is a snapshot of industry trends and poll results from a recent Curinos webinar, “Home Equity Lending: An Assessment of Today’s Market Landscape and Cash-Out Opportunities.”
Source: Curinos LendersBenchmark Analyzer (through Jan 2023)
Home equity re-emerged in 2022 with big growth rates….
….and a change in the credit scores of applicants.
Application volume distribution by credit score segment
Digital adoption is growing, but cycle times are still close to two months!
Those long cycle times mean that home equity faces competition from unsecured installment loans, which are funded more quickly.
Lenders are getting aggressive in line size growth, but struggle in balance activation.