Sunmark Launches 'HomeFlex' HELOC
SCHENECTADY, N.Y.-Flush with cash, Sunmark FCU here recently introduced a new product it hopes will provide steady returns while allowing borrowers throughout the capital region to use home equity to secure a 3.99% loan.
The "HomeFlex" loan is being made available to anyone in the capital's six-county area with an existing home loan and can be used to for home improvements, college tuition or financing an auto, according to Frank DeGraw, head of mortgage financing at the $400-million credit union. "We feel this is going to be gangbusters once people hear about it," DeGraw said.
The Terms Of The HELOC
The initial rate on the 20-year loan is 3.99%, which is good for five years. The loan increase in the second five-year period is capped at another two percentage points, and the cap on the life of the loan is 7.99%.
SVP-Marketing and Retail Operations Susan Siegel said the CU developed the new HELOC because of member requests for a low-cost, flexible borrowing option. At just 3.99%, the 20-year HELOC could present some rate risk as Sunmark plans to keep the loans on its books, but Siegel downplayed those concerns. "With all of the economic news and indicators we are seeing, we do think that rates are going to be low for a prolonged period of time," she said. "We think that the return will be acceptable, especially given the returns of the current market. Like many credit unions we have a lot of liquidity at this point and unfortunately the options for finding a good return on those savings are limited these days."
'Slow Growth Market' Primed for Program
Thanks to the market's unique structure Siegel is also confident that HomeFlex will attract attention. She called the area Sunmark FCU serves a "slow growth market," noting that there is little housing turnover in the upstate region as many individuals who choose to come to college in the region settle down and remain there for years allowing many to still have decent equity in their homes despite the real estate crash.
"The housing market nationally is not fantastic but the area we served is very blessed. Our housing market, while certainly not unaffected has not been affected to the extremes others have seen," Siegel noted.
Ed Roberts contributed to this story.