Relationships are more like journeys than they are destinations. In romance and in business alike, staying connected and continuing the exchange of resources is an obvious choice when the needs of all parties are fulfilled. However, much like the relationship between traditional home equity lenders and borrowers, when one grows complacent as the other evolves, challenges arise, making other options appear more attractive.
As the home equity boom continues, bringing the total average equity per borrower to $300,000 with a 25% growth in tappable equity year over year, more homeowners are choosing to tap into their home’s value as a low-cost way to borrow large sums of money.
While gravitating toward home equity products makes sense in the recent rate environment, doing so could come with an unnerving feeling of delayed gratification. Against the backdrop of today’s fast-paced lending market, the traditional home equity process can seem lengthy, demanding, and complicated.
There is a seismic shift in borrower behavior that is priming this market for disruption. It was once assumed that banks would continue dominating the home equity space due to their longstanding relationships with customers; but this certainty has given way to inertia, allowing new fintech organizations with better marketing, sleeker interfaces, fully digital capabilities, faster processing speeds, and differentiated product options to enter the scene.
The current landscape now demands traditional financial institutions to determine if their legacy products and services can endure the growing appeal of fintech and digital lenders.