Many lenders have decried the supposed lack of opportunity in this oft-cited "rising-rate environment," but one CU here brought in 165% of its goal during a recent home equity loan campaign thanks to an attractive interest rate offer.
Altura Credit Union, which serves anyone who lives, works, attends school or worships in Riverside and San Diego counties, plus selected cities in Orange and San Bernardino Counties, offered a 1% discount on its standard fixed-rate home equity loan product to its top members. The promotion, which ran from May 1 through June 30, featured a 6.75% home equity loan, with an optional 7.75% home equity line of credit.
Paul Studer, Altura's VP of consumer lending, said the credit union created a list of members who did not have any of its home equity products. Then, the list was sent to Experian for a "soft credit check," creating a pre-approved list of those with strong FICO scores, he said. These members received a direct mail offer, and Altura added in-branch marketing and mentioned the loan offer on its website.
The goal was for $13 million for each of the two months of the campaign-a target amount based on the 106,000-member, $783 million CU's previous record home equity loan volume of $11.9 million. The result: $21.3 million in loan volume in May; $21.6 million in June. The total of $42.9 million far exceeded the $26 million target.
"We really blew that goal out of the water," assessed Studer. "It was a great promotion, and we expected it to be successful, but not that successful."
According to Studer, most members opted for the fixed-rate equity loan rather than the variable-rate HELOC-by approximately 80% to 20%. One possible reason: the 7.75% rate was the standard, not a special. While the runaway real estate appreciation rates of recent years have slowed, Altura's field of membership includes two of the fastest-growing counties in the United States: Riverside and San Bernardino, also known in Southern California as the "Inland Empire."
Studer said home prices in the area have not been increasing as quickly in 2006 as in, for example, 2004, but "people still have plenty of equity." "I guess they were waiting for the right opportunity," he said.
