Established relationships with lenders still play a crucial role for borrowers looking at home equity line of credit (HELOC) according to the latest U.S. Home Equity Line of Credit Satisfaction Study by research and rating firm J.D. Power. The study evaluates customer perception of the HELOC process and explores the key variables that influence their choice, satisfaction, and loyalty.
The study was based on responses from more than 4,008 HELOC borrowers and based its findings on six factors. They included offerings and terms; application/approval process; closing; interaction with the lender; billing and payment; and post-closing and usage. These factors were also used to rank the best banks for HELOC borrowers regarding customer satisfaction on a 1,000 point scale.
With 869 points SunTrust Bank ranked the highest in overall HELOC customer satisfaction followed by BB&T with 860 points, and Huntington National Bank with 851 points. The industry’s average score was 837 points, the study found.
“Lenders need to recognize that the HELOC customer experience is a journey that begins with initial consideration and evaluation and extends through to usage, with each part of the journey affecting overall perceptions,” said Craig Martin, Senior Director of Financial Services at J.D. Power. “Increasingly, many steps in that process are occurring in digital and mobile channels, which are areas that the industry has been slow to leverage and refine.”
The study found that while established relationships with lenders still played a key role for many home equity borrowers, many younger borrowers were increasingly looking at digital channels to gather information. It indicated that 59 percent millennials were gathering information on HELOCs online via desktop computers and 50 percent gathering this information via smartphones or tablets.
Indicating a need for banks to reach out more to borrowers, 88 percent of the respondents to the study said that they began their HELOC search without prompting from a lender. Millennials, the study said, were least likely to hear from lenders on HELOC with 94 percent of them saying they initiated the HELOC product search themselves.
Nearly two-thirds of all borrowers expressed some concern about obtaining a HELOC product, with key concerns including the variable nature of the loan and borrowers worried about overextending themselves by taking such credit.
“The findings in this study are not only instructive to lenders on how to better tailor their customer offerings and processes to create a better experience, but they also provide a valuable guide to consumers on what to look for when shopping and applying for a HELOC product and choosing a partner for their borrowing needs,” Martin said.