PrimeLending Launches New Home Equity Loan Offering Homebuyers More Financial Flexibility

Rhea-AI Summary

PrimeLending, a subsidiary of Hilltop Holdings (NYSE: HTH), has introduced a new home equity loan product designed to provide homeowners with financial flexibility. This loan enables homeowners to convert their home equity into cash, which can be used for a variety of purposes such as consolidating high-interest debt, covering expenses, or managing personal finances.

According to the Federal Reserve Bank of New York, the average credit card balance has increased by 10% year-over-year, reaching $1.129 trillion in Q4 2023, with an average APR of 21.19%. In contrast, homeowners have nearly $30 trillion in home equity, as reported by the Federal Reserve Bank of St. Louis. The new loan product aims to leverage this equity, offering a fixed-rate repayment over a 30-year term.

PrimeLending emphasizes its customer-centric approach, boasting a 96% customer satisfaction rating for 2023. The company serves customers across all 50 states, providing a range of mortgage and home equity solutions.

Positive

• New home equity loan product offers financial flexibility.
• Homeowners can convert home equity into cash.
• Fixed-rate repayment over 30 years.
• PrimeLending has a 96% customer satisfaction rating.
• PrimeLending operates in all 50 states.

Negative

• None.

Insights

Financial Analyst

The introduction of PrimeLending's new home equity loan product stands out in the current financial context. With credit card balances reaching $1.129 trillion and APR for credit cards at a historical high of 21.19%, this product offers a potentially lower-cost alternative for homeowners to manage their finances. By tapping into home equity, homeowners can convert a part of their home's value into cash at a fixed-rate, which is typically lower than credit card rates.

A key consideration for investors is the potential for increased revenue streams for PrimeLending. As homeowners increasingly look for ways to consolidate high-interest debt, the demand for this home equity loan could rise, bolstering loan origination volumes and fee income for PrimeLending.

Additionally, the large volume of accumulated home equity in the market — nearly $30 trillion — provides a substantial target market for this product. The strategic timing of this offering aligns well with macroeconomic indicators pointing to high consumer debt and rising interest rates. However, potential risks include the volatility of the housing market and the financial stability of borrowers, which could affect loan repayment rates.

Market Research Analyst

From a market perspective, PrimeLending’s new home equity loan can attract a significant segment of financially stressed homeowners. The product’s flexibility, allowing homeowners to use the funds for various purposes like debt consolidation, home improvements, or medical expenses, aligns with current consumer needs driven by economic challenges.

This move also positions PrimeLending competitively within the mortgage lending industry by expanding their product suite and potentially gaining market share. The emphasis on customer satisfaction, highlighted by a 96% satisfaction rating, reinforces their strong service reputation, which could be a persuasive factor for new clients exploring home equity loans.

However, it is vital to monitor consumer credit performance and housing market trends. Any downturn in the housing market could affect the perceived value of home equity, potentially impacting the attractiveness and risk profile of such loans. Additionally, while the product can provide immediate financial relief, there is always the risk that borrowers might increase their overall debt burden, leading to longer-term financial difficulties.

DALLAS--(BUSINESS WIRE)-- National residential lender PrimeLending, a PlainsCapital Company, now offers a new home equity loan product¹, giving homeowners the ability to convert home equity into cash. A borrower can use the cash any way they want, including as a tool to manage their finances, cover expenses and consolidate high-interest debt.

As Americans continue to wrestle to make ends meet, many have turned to using credit cards to cover necessities, such as food, gas, utilities, and medical expense. According to the Federal Reserve Bank of New York, average card balances rose by 10% from a year ago, reaching $1.129 trillion in the fourth quarter of 2023. At the same time, the average annual percentage rate (APR) for all credit cards for the fourth quarter of 2023 was 21.19%, the highest since the Fed began tracking in 1994.

“At PrimeLending, we offer homeowners more than just a mortgage – we give them a wide range of options, plus our expertise and guidance, to more confidently manage their personal finances,” said Tim Elkins, PrimeLending’s Chief Production Officer. “Our new home equity loan affords homeowners the flexibility to tap into their home equity as an option to help them achieve their financial goals.”

In total, American homeowners have accumulated nearly $30 trillion in home equity as of October 31, 2023, according to the Federal Reserve Bank of St. Louis.

With a PrimeLending home equity loan, homeowners can access a portion of their home's value without having to sell it. Simply put, homeowners can borrow money using their home equity as collateral and repay the loan at a fixed-rate over a 30-year term. Homeowners receive the cash as a lump sum upfront to use however they choose, such as consolidating debt, making home improvements, or covering tuition, medical or unplanned expenses.

Whether looking to buy, refinance, renovate or build a home, the PrimeLending team works alongside our customers in all 50 states. PrimeLending’s customer-centric approach blends unmatched mortgage expertise, product choice and digital convenience to deliver a rewarding homebuying experience. Delivering on this promise since 1986, PrimeLending is proud to consistently earn a 96% customer satisfaction rating². PrimeLending is a wholly owned subsidiary of PlainsCapital Bank, which in turn is a wholly owned subsidiary of Hilltop Holdings Inc. (NYSE: HTH). More information at PrimeLending.com.

¹All credit decisions for brokered products will be made by a third party. Restrictions and limitations apply.

²Survey administered and managed by an independent third party following loan closing. 96% satisfaction rating refers to the rating our customers give our loan officers. PrimeLending received an overall 96% Customer Satisfaction Rating for the period 1/1/23-12/31/23.

All loans subject to credit approval. Rates and fees subject to change.

©2024 PrimeLending, a PlainsCapital Company (PrimeLending). (NMLS: 13649) Equal Housing Lender.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240618994779/en/

Mandy Jordan

972-852-8235 | mjordan@primelending.com

Source: PrimeLending

FAQ

What new product has PrimeLending launched?

PrimeLending has launched a new home equity loan product that allows homeowners to convert their home equity into cash.

How can homeowners use the cash from the new PrimeLending home equity loan?

Homeowners can use the cash for various purposes, including consolidating high-interest debt, covering expenses, or managing personal finances.

What is the average credit card balance in the US as of Q4 2023?

The average credit card balance in the US reached $1.129 trillion in Q4 2023.

What is the average APR for credit cards in Q4 2023?

The average APR for credit cards in Q4 2023 was 21.19%.

How much home equity have American homeowners accumulated as of October 31, 2023?

American homeowners have accumulated nearly $30 trillion in home equity as of October 31, 2023.

What is the customer satisfaction rating of PrimeLending for 2023?

PrimeLending has a 96% customer satisfaction rating for 2023.

What is the term of the new home equity loan offered by PrimeLending?

The new home equity loan offered by PrimeLending has a fixed-rate repayment term of 30 years.