After the Curve: Lending Outlook

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HELOC’s Are Coming! Are you Prepared?

FirstClose ONE Customers are Ready for the HELOC Boom!

Be Proactive

If your institution provides HELOCS, now is the time to be proactive, not reactive. Due to the COVID-19 recession and trillions of dollars of Federal aid, interest rates are all but certain to increase in the near future. In an article written by Forbes Magazine, we are expected to go through 3 phases of recovery. The first phase is the Protect phase. During this phase, we are protecting ourselves with stay-in-shelter orders and extreme social distancing. The country is in complete lockdown to insure the health and safety of its citizens. The second phase is the Re-Open phase. This phase will see gradual lifting of stay-in-shelter orders and stores will begin to slowly re-open. However, social distancing will still remain top of mind for most people as we journey through the recovery process. In the Re-Open phase, we’ll probably continue social distancing. Stores and restaurants will re-open but discourage large crowds. This is the phase where we can truly begin to work towards returning our economy to some sense of normalcy.

How will this effect HELOC lenders? During the first and second phase, the government will continue to artificially suppress interest rates and keep them at low levels. However, once we enter the Re-Open phase, inflation is inevitable and interest rates will increase. The United States recently added over $2T to our national debt when congress passed the Coronavirus Stimulus Bill, and this will have to be repaid. Inflation is coming and it’s just a matter of time before interest rates increase. What does this mean? It means that refinance and purchase transactions will slow or come to nearly a grinding halt. Consumers will not be inclined to utilize a refinance to obtain cash out money if it means their monthly payment will increase by hundreds or even thousands of dollars. Instead, consumers will turn to HELOCS. Yes, the interest rate will be higher, but consumers are smart enough to realize that they don’t need to reset their entire mortgage at a higher interest rate to obtain cash out, and they certainly don’t want the even higher interest rate of credit cards or other unsecured debt.

How can FirstClose ONE help?

FirstClose ONE is complete web platform that instantly approves HELOC applications while also performing automated back end solutions to manage vendors and automate product selections. The FirstClose ONE platform easily plugs in to your current tech stack and is designed for high volume lenders that are looking to streamline their processes from “hello to here’s your money”. The result is faster closing times, increased loan capacity and reduced expenses. With so much uncertainty, consumers will be shopping for lenders that can close quickly. In today’s environment, these consumers will be in search of lenders with easy to use online applications so they can put desperately needed cash in their hands as soon as possible. If a lender is still experiencing a 30+ day average time to close on a HELOC, this should be a warning bell. Consumers will not wait this long if another lender down the street is able to close in 10-20 days.

Due to these unprecedented times and the increase in interest rates that are certain to come, now is the time to be proactive, not reactive! Don’t let your closing times get bogged down due to an increase in volume. Be proactive and offer the service that today’s consumer will demand. Now more than ever, we are living with consumer expectations with services like they get from Uber, Amazon, Doordash and Netflex that influence an “I want it now, I need it now” world. Lenders that are prepared to deliver that promise will reap the rewards and take back market share lost to non-bank fintech lenders. The lenders that are ill prepared and get caught reacting, will struggle to compete. With the pace of innovation today, you don’t need to struggle, you just need the right partner.

Contact FirstClose today and learn how we can keep your moving forward after the curve! Hundreds of FirstClose ONE customers are already prepared. Are you?

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