COLORADO SPRINGS-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.
A Return To Sanity
"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."
Something else that hasn't changed since early 2012, according to Vogeney: sanity remains absent in auto loan pricing. "I'm firmly in belief that that's not going to happen this year."
Vogeney had expected used car values to decline during 2012, but he said he believes they have finally stabilized, though he predicted that declines wouldn't occur until significant improvement in the economy takes place.
Once that happens, he said, "all of those people with car loans in the last few years are going to be horribly upside down."