In today’s economic climate—marked by high mortgage rates, persistent inflation, and record levels of credit card debt—community lenders face a pivotal moment. Traditional lending products like mortgages and auto loans are slowing, and consumers are more cautious than ever. But amid this volatility, there’s one area of opportunity that’s both stable and strategic: home equity lending.

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Home equity isn’t just another product on the shelf. It’s a tool for growth, a retention strategy, and a way to meet borrowers where they are financially. For lenders looking to stay competitive and relevant, making home equity a lead product isn’t just smart, it’s essential.

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A Changing Landscape for Borrowers

The borrowing environment has shifted dramatically over the past two years. As the Federal Reserve has raised interest rates to curb inflation, mortgage rates have climbed to levels not seen in over two decades. That’s taken a toll on purchase and refinance volume. At the same time, the average American household is carrying over $6,000 in credit card debt, with many facing monthly payments that far exceed what they can comfortably afford.

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This pressure is leading borrowers to look for alternative solutions—ways to access cash without giving up favorable first mortgage terms or taking on even more expensive debt. That’s where home equity comes in. 

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Today’s homeowners have built up tremendous equity. According to Cotality, the average homeowner gained more than $274,000 in equity over the past decade, creating a financial cushion they can now tap into. But because most of these borrowers refinanced into ultra-low rates between 2020 and 2022, they’re reluctant to pursue cash-out refinancing or sell their homes. Instead, they’re seeking options that preserve their current mortgage and still meet their liquidity needs.

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Home equity loans and lines of credit do exactly that. And as economic uncertainty continues, these products are becoming more attractive—not only to borrowers but to the lenders who serve them.

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Why Home Equity Lending Deserves the Spotlight

Historically, many lenders treated home equity as a secondary offering—something seasonal, reactive, or marketing-driven. But in today’s high-rate, high-demand lending landscape, home equity deserves center stage.

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Here’s why it’s worth prioritizing:

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• It drives growth: Home equity lending opens new channels for revenue generation, even as traditional lending pipelines slow. Lenders can boost originations and fee income without having to scale staffing or infrastructure proportionally.
  
  
• It deepens relationships: Borrowers who access home equity through their primary financial institution are more likely to view that institution as a trusted advisor, not just a loan provider. That trust can translate to longer-lasting, stickier borrower relationships.
  
  
• It enhances retention: Once a borrower has a home equity product in place, especially one that’s easy to manage and delivers a great experience, they’re far less likely to look elsewhere for future financial needs.

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What Makes Home Equity Lending Work Today?

Lenders that want to lead with home equity can’t rely on outdated processes or disconnected systems. Speed, efficiency, and borrower experience are now table stakes.

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That’s where collaborative fintech partnerships can play a transformative role.

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Fintech no longer means disintermediation. There’s a growing ecosystem of collaborative fintechs that are built to empower community lenders rather than compete with them. These partners offer digital tools and automation that slot directly into existing workflows, helping institutions scale home equity lending without sacrificing service or local touch.

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Coviance, for example, provides solutions like borrower friendly online applications and configurable workflows that reduce manual effort and enhance visibility across teams. It’s the kind of behind-the-scenes transformation that lets lenders move faster, improve accuracy, and handle higher volume—without ballooning overhead.

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The result? A home equity program that’s modern, scalable, and fully aligned with your insitution's mission.

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Three Keys to Elevating Home Equity Lending

If you’re ready to lead with home equity, these three focus areas can help ensure your strategy is built for today’s borrower—and tomorrow’s growth.

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1. Prioritize Borrower Experience

Today’s consumers are used to shopping, signing, and managing everything from their phones—and that includes their financial lives. If your lending experience isn’t built with convenience in mind, borrowers will look elsewhere.

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That means offering:

• A fully digital application that works on mobile and desktop
  
  
• Easy document upload and tracking
  
  
• Clear communication and real-time status updates
  
  
• Quick turnarounds and transparent timelines
  
  

Coviance’s Borrower Experience is designed with all of this in mind. It allows applicants to compare loan offers, upload documents, and track progress—all in one white-labeled platform that keeps your institution front and center.

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But great experience isn’t just about technology. It’s about aligning every touchpoint—human or digital—with the trust and ease your members expect.

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2. Streamline Operations for Speed and Efficiency

Your internal workflows are just as important as your external experience. Manual processes, email threads, and fragmented systems slow everything down—and that has a direct impact on both borrower satisfaction and loan volume.

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That’s why automation is key. Coviance streamlines back-end operations with intelligent decisioning, centralized communication, and automated task routing. These efficiencies allow teams to process more loans with the same (or even fewer) resources.

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That kind of improvement not only speeds up funding—it frees staff to focus on higher-value tasks, like advising members or identifying cross-sell opportunities.

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3. Train Staff to Position Home Equity Strategically

Technology and efficiency are critical—but your people are your biggest asset. Frontline teams must be equipped to understand, communicate, and champion home equity lending as part of a broader financial wellness strategy.

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That starts with education:

• What makes home equity attractive in the current rate environment?
  
  
• When is a HELOC vs. a fixed-rate loan the better fit?
  
  
• How does this product support debt consolidation, home improvement, or tuition planning?
  
  

Empower your staff with the knowledge to guide members confidently. Create quick reference materials, hold regular product refreshers, and tie sales goals to borrower outcomes—not just volume.

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With the right training and support, your teams become advocates for home equity—and trusted partners for your members.

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Home Equity in the “New Normal”

While the term new normal might bring back 2020 memories, it accurately captures today’s financial reality. We’re in a fundamentally different lending environment—one that isn’t likely to swing back to 3% rates or double-digit auto loan growth anytime soon.

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Consumers are under pressure, yet many are sitting on wealth in the form of home equity. Community lenders have a unique opportunity to help members access that value in a responsible, transparent, and beneficial way.

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Home equity isn’t just a product—it’s a bridge. It connects today’s financial needs with long-term stability. For lenders, it’s a chance to show up when it matters most and offer solutions that go beyond transactions.

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Don’t Wait for the Market to Shift—Lead It

The institutions that win in this market won’t be the ones that wait for rates to drop or for old patterns to return. They’ll be the ones who reimagine lending strategy to align with modern borrower needs. And that opportunity is home equity.

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With the right approach, the right people, and the right technology, home equity can move from the sidelines to the spotlight—creating sustainable growth for your institution and meaningful impact for your members.

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Let Coviance help you build a home equity program that’s efficient, competitive, and ready for what’s next. Our consultative Home Equity Health Check identifies process improvements and automation opportunities so you can scale efficiently.