As home prices rise, more homeowners are turning to home equity lines of credit, but they have concerns about cashing out on their home. The number of American consumers expected to take out a HELOC is projected to double to 10 million over the next five years, according to the
J.D. Power 2018 U.S. Home Equity Line of Credit Satisfaction Study. The study looked at HELOC preferences among consumers, including customer choice and satisfaction based on options and terms, application and approval process, closing, interaction with the lender, and post-closing.
The interest on HELOC loans is still deductible under the new tax law as long as the proceeds are used for home renovations. “Steadily rising home prices, rising equity in the home, and growing competition among lenders creates an opportunity for homeowners to tap into a low-cost source of funds,” says Craig Martin, senior director of financial services at J.D. Power.
The availability of HELOC information online is increasingly important to borrowers, according to the survey. More than 50 percent of millennials say they’ve been gathering information online via desktop computers or smartphones and tablets. Eighty-eight percent of HELOC borrowers say they began the HELOC search without any prompting from a lender. Customers appear to be heeding advice to shop around for a HELOC, particularly among millennials. More than half—55 percent—of customers say they considered at least one other lender during the shopping process.
But 64 percent of all borrowers, especially millennials, express some type of concern about obtaining a HELOC, including the variable nature of such loans and whether borrowers are overextending themselves. “Lenders need to recognize that the HELOC customer experience is a journey that begins with initial consideration and evaluation and extends through to usage, with each part of the journey affecting overall perceptions,” Martin says. “Increasingly, many steps in that process are occurring in digital and mobile channels, which are areas that the industry has been slow to leverage and refine. As millennial homeownership rates increase and home values continue to rise, lenders need to be able to meet these customers where they want to be, not try to force them into the lender’s entrenched methods.”
The lenders ranking highest in overall HELOC customer satisfaction are SunTrust Bank, followed by BB&T and Huntington National Bank, according to J.D. Power’s survey.
Source: J.D. Power
