One person believes that home equity lending could be a major boon for credit union growth in the new year.
"Prices in most parts of the country are starting to stabilize and move up slowly, and that will slowly increase and encourage people to borrow against their homes—not for vacations or spending sprees, but to improve their homes," said Bill Vogeney, EVP/chief lending officer at Ent FCU and a member of the executive committee for the CUNA Lending Council.
Vogeney pointed out that homeowners who have already refinanced may be paying a rate as low as 2.75%. Once rates start going up, payments will become more affordable, "so unless personal incomes rise dramatically, which spells inflation and higher rates, the real estate market may not be very conducive to people moving up and buying a more expensive house if the one they're sitting on has a low rate mortgage in the future."
That environment, continued Vogeney, has created a pent-up demand for homeowners to use their equity to improve their current home, rather than trading up.
"I think a year ago we were still looking at industry forecasts and expecting rates to rise, and that hasn't happened," he said. "I think we're in for an elongated period of time with lower rates—at least a couple of years."