ATLANTA -
According to the study, entitled "Home Equity Lending Monitor 2006," four in ten equity line of credit holders have not accessed their revolving line in the past year. In a market where household penetration is not widening, Synergistics said maximizing the activity-and profitability-of the current holder base is of obvious importance. Although seven in ten of this inactive group do have an outstanding balance, the portion indicating no balance (20%) is twice that of equity line of credit (ELC) holders overall (10%).
All equity line of credit holders were asked if they would be more likely to use their line in the next year if they received some type of incentive. In general, only about four in ten of the inactive holders respond to any incentive, as compared to about six in ten ELC holders overall. One-fourth might be more likely to use their line in response to receiving the prime rate or less for six months, the annual fee being waived, or receiving a 10% discount on home improvement services.
"The size of the inactive ELC holder segment is alarming. That they are somewhat less prone to be carrying a balance and are not as responsive to activation incentives indicates a possible attrition dynamic," said William H. McCracken, CEO of Synergistics. "Although it would be most desirable to move these holders back into the 'active sphere,' providers may have to give consideration to the implementation of inactivity or other punitive fees to maintain some level of profitability among these customers."
For info: www.synergisticsresearch.com
