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HELOCs and Other Lines of Credit - US - October 2009

This report examines the trends, outlook, and opportunities in the US market for home equity lines of credit (HELOCs) and personal lines of credit unsecured by residential real estate (LOCs). It builds on the Mintel study, Residential Mortgages and HELOCs, August 2008. It estimates the size of the market and analyzes the top players and their strategies. It looks at the major issues affecting the industry and analyzes their possible impact, including the state of the economy, the housing market, consumer and lender attitudes, and credit quality trends. It examines consumer views on borrowing using one’s home as collateral, and how to shop for a loan. It also analyzes recent trends in direct marketing and offers suggestions on how lenders can succeed in a changing and difficult environment.

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Table of contents

  1. Scope and Themes

    • Scope of this report
      • What you need to know
        • Data sources
          • Consumer survey data
            • Advertising Creative
              • Abbreviations and terms
                • Companies mentioned in this report
                • Executive Summary

                  • Industry highlights
                    • Outlook
                      • The competitive environment
                        • Advertising and promotion
                          • The consumer
                          • Insights and Opportunities

                              • Today’s first-time homebuyers will be attractive future HELOC customers
                                  • Figure 1: First-time homebuyer affordability, 2006-09
                                • Focus HELOC lending on places where equity has held up
                                  • Unsecured LOCs: A viable option for equity-challenged borrowers
                                    • High-income African-Americans are an attractive HELOC niche
                                    • Inspire Insights

                                        • Life After Debt
                                          • What we've seen
                                            • Implications
                                            • Competitive Context

                                              • Key points
                                                • A highly fragmented, competitive market
                                                    • Figure 2: Largest home equity loan portfolios
                                                    • Figure 3: Top residential mortgage servicers, 2007-08
                                                • Segment Performance – HELOCs in the “great recession”

                                                  • Consumer bad debt figures jump to historic heights
                                                    • Mortgage chargeoff ratio well above historic norms
                                                      • Figure 4: Residential mortgage delinquency rates, 2000-09
                                                      • Figure 5: Residential mortgage chargeoff rates, 2000-09
                                                      • Figure 6: Home equity loan performance at top three lenders, 2008-09
                                                    • Unsecured bad-debt figures skyrocket
                                                      • Figure 7: Consumer loan chargeoff rates, 2000-09
                                                      • Figure 8: Consumer loan delinquency rates, 2000-09
                                                    • Consumer bankruptcy filings on the rise again
                                                        • Figure 9: Annual personal bankruptcies filed 1995-2009
                                                        • Figure 10: Quarterly consumer bankruptcy fililngs, 2000-09
                                                        • Figure 11: U.S. rate of unemployment, 2008-09
                                                    • Market Drivers: Homeowner Equity and Mortgage Debt

                                                      • Key points
                                                        • Shrinking home equity, heavy mortgage debt will keep lid on lending
                                                            • Figure 12: Homeowners’ equity in $ millions, 2000-08
                                                            • Figure 13: U.S. home values in $ millions, 2000-08
                                                            • Figure 14: Case Shiller home price index 2003-April 2009
                                                          • The mortgage debt left behind
                                                              • Figure 15: U.S. mortgage debt outstanding in $ millions, 2000-08
                                                              • Figure 16: Percentage of equity owned by homeowners, 1995-2009
                                                            • Back to the Future with LTVs
                                                              • The prevalence of negative equity
                                                                • Worse before it gets better
                                                                  • Recent positive news on home sales, but what about prices?
                                                                    • Figure 17: Median price of a new home, July 2008-July 2009
                                                                    • Figure 18: Median price of an existing home, July 2008-July 2009
                                                                    • Figure 19: Case-Shiller home price index
                                                                  • Where will loan demand come from?
                                                                    • Figure 20: U.S. Personal savings rate as a percentage of disposablehousehold income
                                                                    • Figure 21: U.S consumer credit outstanding, 2004-June 2009
                                                                  • A silver lining: new loans will be squeaky clean
                                                                  • Leading Companies

                                                                    • Key points
                                                                      • Bank of America
                                                                        • J.P. Morgan Chase
                                                                          • Wells Fargo
                                                                            • Citigroup
                                                                              • PNC Financial Services
                                                                                • HSBC
                                                                                • Advertising and Promotion

                                                                                  • Key points
                                                                                    • Mail volume for HELOCs and unsecured LOCs down sharply
                                                                                      • Direct mail, electronic mail, and print advertising
                                                                                        • Figure 22: Wells Fargo email ad, 2009
                                                                                        • Figure 23: Wachovia direct mail ad, 2009
                                                                                        • Figure 24: U.S. Bank direct mail ad, 2008
                                                                                        • Figure 25: U.S. Bank print ad, 2008
                                                                                        • Figure 26: Guaranty Bank direct mail ad, 2009
                                                                                        • Figure 27: BBVA Compass Bank direct mail ad, 2009
                                                                                        • Figure 28: PNC Bank direct mail ad, 2009
                                                                                        • Figure 29: Polish National Credit Union direct mail ad, 2009
                                                                                        • Figure 30: National City Bank direct mail ad, 2009
                                                                                        • Figure 31: Bank of America direct mail ad, 2009
                                                                                        • Figure 32: Bank of America direct mail ad, 2009
                                                                                        • Figure 33: Fidelity Homestead Savings bank print ad, 2009
                                                                                        • Figure 34: Wachovia direct mail ad, 2009
                                                                                      • Television
                                                                                        • Figure 35: US Bank television advertisement, 2009
                                                                                        • Figure 36: US Bank television advertisement, 2008
                                                                                        • Figure 37: US Bank television advertisement, 2008
                                                                                        • Figure 38: Key Bank television advertisement, 2008
                                                                                        • Figure 39: Home Federal television advertisement, 2009
                                                                                    • The Consumer

                                                                                      • Key points
                                                                                        • Incidence of home ownership and HELOCs with age and household income
                                                                                            • Figure 40: Home ownership, by gender and age, July 2009
                                                                                            • Figure 13: Home ownership, byhousehold income, July 2009
                                                                                            • Figure 41: Home ownership, by education level, July 2009
                                                                                            • Figure 42: Home ownership, by marital status, July 200
                                                                                          • Incidence of home ownership and HELOCs with race and Hispanic origin
                                                                                            • Key points
                                                                                                • Figure 43: Home ownership, by race/Hispanic origin, July 2009
                                                                                                • Figure 44: Home ownership, by race/Hispanic origin andhousehold income, July 2009
                                                                                                • Figure 45: Likelihood of applying for a home equity line of credit, by race/Hispanic origin, July 2009
                                                                                                • Figure 46: Likelihood of applying for a home equity line of credit, by race/Hispanic origin andhousehold income, July 2009
                                                                                              • Bank closure or reduction of home equity lines of credit
                                                                                                • Key points
                                                                                                    • Figure 47: Incidence of HELOC reduction, by gender, July 2009
                                                                                                    • Figure 48: Incidence of HELOC reduction, by age, July 2009
                                                                                                    • Figure 49: Incidence of HELOC reduction, byhousehold income, July 2009
                                                                                                  • Mortgage modification programs: half don’t know about them
                                                                                                    • Key points
                                                                                                        • Figure 50: Knowledge of mortgage modification programs, by gender, July 2009
                                                                                                        • Figure 51: Knowledge of mortgage modification programs, by age, July 2009
                                                                                                        • Figure 52: Knowledge of mortgage modification programs, byhousehold income, July 2009
                                                                                                        • Figure 53: Knowledge of mortgage modification programs, by race/Hispanic origin, July 2009
                                                                                                        • Figure 54: Knowledge of mortgage modification programs, by number of children in family, July 2009
                                                                                                      • Demand for HELOCs going forward looks weak, except among families
                                                                                                        • Key points
                                                                                                            • Figure 55: Likelihood of applying for a home equity line of credit, by age, July 2009
                                                                                                            • Figure 56: Likelihood of applying for a home equity line of credit, byhousehold income, July 2009
                                                                                                            • Figure 57: Likelihood of applying for a home equity line of credit, by number of children, July 2009
                                                                                                            • Figure 58: Likelihood of applying for a home equity line of credit, by education, July 2009
                                                                                                          • Attitudes towards home equity loans and how to shop for them
                                                                                                            • Key points
                                                                                                                • Figure 59: Attitudes towards home equity lines of credit, by gender, July 2009
                                                                                                                • Figure 60: Attitudes towards home equity lines of credit, by age, July 2009
                                                                                                                • Figure 61: Attitudes towards home equity lines of credit, byhousehold income, July 2009
                                                                                                                • Figure 62: Attitudes towards home equity lines of credit, by race/Hispanic origin, July 2009
                                                                                                                • Figure 63: Attitudes towards home equity lines of credit, by education, July 2009
                                                                                                            • Cluster Analysis

                                                                                                                • Reformers
                                                                                                                  • Conservers
                                                                                                                    • Contemplators
                                                                                                                      • Opportunity
                                                                                                                        • Cluster characteristics
                                                                                                                          • Figure 64: HELOC clusters, July 2009
                                                                                                                          • Figure 65: Intentions to apply for HELOC, by HELOC clusters, July 2009
                                                                                                                          • Figure 66: Familiarity with mortgage modification programs, by HELOC clusters, July 2009
                                                                                                                          • Figure 67: Attitudes towards HELOCs, by HELOC clusters, July 2009
                                                                                                                          • Figure 68: Attitudes towards the economic situation, by HELOC clusters, July 2009
                                                                                                                        • Cluster demographics
                                                                                                                          • Figure 69: HELOC clusters, by gender, July 2009
                                                                                                                          • Figure 70: HELOC clusters, by age group, July 2009
                                                                                                                          • Figure 71: HELOC clusters, byhousehold income group, July 2009
                                                                                                                          • Figure 72: HELOC clusters, by race, July 2009
                                                                                                                          • Figure 73: HELOC clusters, by Hispanic origin, July 2009
                                                                                                                        • Cluster methodology
                                                                                                                        • Appendix: Trade Associations

                                                                                                                          Companies Covered

                                                                                                                          • Bank of America Corporation
                                                                                                                          • Barclays Capital
                                                                                                                          • BB&T Corporation
                                                                                                                          • Bear Stearns
                                                                                                                          • Bureau of Economic Analysis
                                                                                                                          • CitiFinancial
                                                                                                                          • Citigroup Inc.
                                                                                                                          • CitiMortgage Inc.
                                                                                                                          • Citizens Financial Group, Inc.
                                                                                                                          • Countrywide Financial Corporation
                                                                                                                          • Credit Union National Association
                                                                                                                          • Deutsche Bank AG
                                                                                                                          • E*TRADE Financial Corp.
                                                                                                                          • EverBank Financial Corporation
                                                                                                                          • Fannie Mae
                                                                                                                          • Federal Deposit Insurance Corporation
                                                                                                                          • Federal Trade Commission
                                                                                                                          • Fifth Third Bancorp
                                                                                                                          • First Franklin Financial Corporation
                                                                                                                          • First Horizon National Corporation
                                                                                                                          • Flagstar Bancorp Inc.
                                                                                                                          • FMR Corp.
                                                                                                                          • GMAC Mortgage Group, Inc.
                                                                                                                          • Greenfield Online
                                                                                                                          • Harris Bankcorp, Inc.
                                                                                                                          • HSBC USA Inc.
                                                                                                                          • JPMorgan Chase & Co
                                                                                                                          • KeyCorp
                                                                                                                          • Lehman Brothers Holdings Inc.
                                                                                                                          • MBNA Corporation
                                                                                                                          • Merrill Lynch & Co. Inc
                                                                                                                          • MetLife, Inc.
                                                                                                                          • Morgan Stanley
                                                                                                                          • Mortgage Bankers Association (MBA)
                                                                                                                          • National Association of Home Builders (NAHB)
                                                                                                                          • National Association of Realtors (NAR)
                                                                                                                          • National City Mortgage Co.
                                                                                                                          • National Reverse Mortgage Lenders Association (NRMLA)
                                                                                                                          • PHH Mortgage Corporation
                                                                                                                          • Regions Financial Corporation
                                                                                                                          • Royal Bank of Canada
                                                                                                                          • SunTrust Banks Inc.
                                                                                                                          • The American Bankers Association
                                                                                                                          • The PNC Financial Services Group
                                                                                                                          • U.S. Bureau of Labor Statistics
                                                                                                                          • U.S. Bureau of the Census
                                                                                                                          • US Department of Commerce
                                                                                                                          • USAA
                                                                                                                          • Visa U.S.A. Inc.
                                                                                                                          • Wachovia Corporation
                                                                                                                          • Washington Mutual Inc
                                                                                                                          • Wells Fargo Home Mortgage

                                                                                                                          HELOCs and Other Lines of Credit - US - October 2009

                                                                                                                          US $3,995.00 (Excl.Tax)