September 10, 2019
Personal Loans Take a Bite Out of HELOCs
Two posts back, we discussed how the tappable equity that homeowners have available to them is increasingly being left on the table. The whys are complicated—nothing in the market ever has just one reason for being the way it is—but one thing is becoming clear: home equity lines of credit (HELOCs) are being supplanted, at least in part, by personal loans.
According to an April report by J.D. Power reporting on the results of surveys—the J.D. Power 2019 Personal Loan Satisfaction Survey and the Home Equity Line of Credit Satisfaction Survey—the personal loan market has seen something of a boom in recent years. 2018 saw around $141 billion in these types of loans, which means that the number of these sorts of loans has increased by 40 percent over just the past four years.
As the title of the surveys suggests, what was being measured by J.D. Power was in large part the level of satisfaction customers feel with the types of loans they have been taking on—and personal loans have been outranking home equity lines of credit. The survey puts forth a 1,000 point satisfaction scale. Personal loans were ranked by respondents at 853 points. Home equity lines of credit rated only at 834.
Lower ratings means less volume of customer referrals and that customers “will consider alternative products” (other loan types) to the one being rated.
Interestingly, the main feature that seems to be lending personal loans their key advantage appears to be digital superiority: easier to access graphical user interfaces and swift approval go a long way, and the more traditional forms of loans, like home equity lines of credit, are still for the most part behind the ball on adopting such customer-friendly elements. Indeed, the majority of personal loan applicants had applied digitally, with a full 40 percent applying exclusively online.
Even if you don’t plan to take advantage of a HELOC at any point, you will need secure title to your new home. At Topouzis & Associates, P.C., we offer the services that ensure title to your home purchase gets conveyed clear of defects—and we also supply purchasers with Owner’s Policies of title insurance, just in case. Contact us if you want your property transfer in Cranston, Rhode Island; Springfield, Massachusetts; or Miami, Florida to go through without a hitch—both before and after closing.