Home Improvement Lending

Heightened interest rates, high residential real estate prices, and limited housing inventory have all contributed to a ‘fix instead of sell’ mindset among homeowners. For credit union and banking lenders, the size and strength of the home improvement segment provides a compelling opportunity for short-term portfolio diversification and long-term growth in deposits.

Among other benefits, this segment is known for its diverse opportunities and relatively low level of risk. Through embedded lending platforms, today’s credit unions and banks can embrace the very best that home improvement offers, and do so in a convenient, seamless, and customer-centered way.

Did you know?

59% of U.S. homes
were built before 1980.

With many of America’s homes in need of repair and new home builds at historical lows, the home improvement space continues to present a compelling opportunity for lenders.

Why choose home improvement?

Home improvement loans offer exceptional flexibility and represent lower risk than many other lending opportunities. Following are just a few of the reasons lenders are interested in this multi-faceted loan class.

Diverse project costs.

Home improvement projects vary widely in cost—ranging from extensive renovations costing $100,000-$200,000, to HVAC installations costing $5,000-$12,000. This offers lenders the opportunity to tailor loans based on their portfolio goals.

Subpar financing options.

Many existing offerings, such as credit card-based financing, lack favorable terms in the long run. Established lenders often offer exploitative rates, while other options, such as large banks, are also met with consumer caution.

Predictable payback.

Essential home improvement loans tend to have lower default rates due to their necessity. Borrowers in this category are more likely to respect the loan terms and avoid premature refinancing, ensuring reliable payback for lenders.

New deposit opportunities.

Credit unions aiming to increase their deposits can leverage fair financing programs. These loans help support larger projects that ultimately promote the growth of local businesses and can potentially turn merchants and borrowers into future depositors.