Fifth Third Offering HELOCs at a Teaser Rate as a Promotion
Fifth Third Bank in Cincinnati is offering a teaser rate to new home equity line of credit borrowers through July 31.
The $141 billion-asset company said the special offer comes with a fixed introductory annual percentage rate of 1.99% for six months for customers with a credit score of 750 or more. After the introductory period, the HELOC adjusts to a variable rate which could have an APR as low as 3.24%.
HELOC originations are expected to increase in 2016 as interest rates rise, which makes consumers reluctant to refinance their first mortgage to take cash out of their property.
Nancy Elkus, vice president and senior consumer lending product manager for Fifth Third Bank, said the most popular reasons borrowers take out HELOCs are for home improvement projects and debt consolidation.
"It's a really smart way to borrow money," said Elkus, who chairs the Home Equity Lending Committee for the Consumer Bankers Association. "Typically there are tax advantages and many consumers do not realize that there is a lot of flexibility with a home equity line of credit."
According to research from CBA Live in Phoenix, home equity lenders are putting more loans on the books due to increased property values, but utilization rates are falling and older loans are paying off at a faster clip than lenders can replace them.