Lending in a Rising Interest Rate Environment

It’s no secret that the effects of high inflation are being felt throughout the country. To combat a sharp spike in inflation, the US Federal Reserve has increased its key short-term interest rate twice this year with the latest by half a percentage – a first in almost 22 years. The central bank is expected to increase rates seven more times in the short term to reach a goal of 3% by early 2023.

Comparatively to historical levels, consumers still have access to competitive rates. Credit unions are navigating a difficult lending environment. Raising rates to battle growing inflation will cause borrowing to become more expensive for consumers while the need for capital grows with higher prices. So how do credit unions, who rely on lending to their members and potential members, thrive and survive in the current high-interest rate and growing inflation environment? You forge ahead!

Need for capital does not stop especially with higher prices. Adapt marketing and messaging to secure rates today before they go up further. Find opportunities to support your members. We believe Ser Tech can help.

 

Home Equity and Home Equity Line of Credit

Homeowners have built meaningful equity in their homes over the recent strength and appreciation in the housing market. Property values rose an average 16.9% in the last year alone. As need for capital manifests with the current inflation, offer a home equity loan or home equity line of credit to allow members to access appreciated value in their homes.

 

Credit Cards

When the Fed raises rates, variable interest rate cards will see an increase as well. One way to provide protection to your members is by offering zero-rate balance transfer or zero-rate introductory cards. Ser Tech’s Fetch Marketing allows your institution can pin-point your members that have cards outside of your institution and send these qualified members pre-approvals, allowing them access to more stable credit, offering time to pay off their debt, and saving them from the strain of growing interest.

 

Pivot from Refinance to Acquisition

Refinance in a rising interest rate environment has its clear challenges. That said, the economy will move forward, and consumers always need capital. The housing market will slow and pricing will stabilize to allow new home buying to continue. The auto market is already seeing inventory levels starting to return to normal and pricing levels cool, allowing consumers to access the new cars and trucks they have been hoping for since the beginning of the pandemic. Targeted loangen marketing can allow your credit union to focus on members with no mortgage tradelines, older auto loans and even those who are actively looking for mortgage or auto loans. Change your lending strategy to acquisition with the same level of precision as refinance.

 

Triggers

As referenced above, what if you could know – within 24 hours – when one of your members was actively searching for loan products. Sixty percent of loan shoppers will commit to a loan within a week of a credit bureau inquiry. Ser Tech’s Fetch Trigger Marketing monitors your members, daily, who are actively shopping for a loan and delivers your pre-approved loan offers to them directly, avoiding the loan from going to another lender, preventing refis and protecting your member relationship. Monitor your members that are looking for auto loans, credit cards, mortgages, and personal loans.

 

Flex Campaigns

It’s not just the consumer that is feeling the effects of inflation. Lenders must be precise and strategic in how they spend their marketing dollars. Ser Tech can help credit unions cast a broader net while managing spend with its Flex Campaign. During a time when you are not sure exactly what your members need, inform members of what capital they have access to by offering multiple products. The Flex marketing campaign allows a credit union to present up to four loan products in a single marketing piece. Ser Tech evaluates each member’s qualification for credit across a selection of loan products that our clients select. The Flex Campaign is designed to expand the coverage of loan offers so that consumers can have greater insight into what loan products they are pre-approved for and have access to with their credit union. The Flex Campaign provides financial institutions with a convenient and efficient method of communicating multiple credit offers in one marketing touchpoint. Maximize your marketing effectiveness by offering multiple prescreened loan offers in a single contact!

 

Personal Loans

The price of goods and services are going up. Your members are feeling the pain at the checkout line at their local grocer, the gas pump, in rent, and it is ultimately driving down their bottom-line each month. Your members need capital to help pay for this increase in expenses. It is an opportune time to offer personal loans to qualified members to provide some cushion and relief. Ser Tech will screen your membership base, or potential membership geography, to find borrowers who meet your specific lending criteria, and make pre-qualified offers on your behalf.

 

Broaden Your Buy Box

The recent combination of Ser Tech and GDS Link presents a new dimension of Ser Tech’s services for the credit union industry. GDS provides a next generation underwriting solution that incorporates greater data and relies on advanced analytics to serve a greater spectrum of consumers at all risk levels while achieving better returns at lower default levels. The current environment is the perfect time to rethink and enhance your underwriting solution to target new opportunities and better address current ones. GDS’ datacentric approach allows credit unions to expand their buy box, lower risk and compete with the most sophisticated lenders in the marketplace today.

 

Credit unions have the unique position to assist their members in navigating the current economic environment, and Ser Tech can help. Ser Tech believes access to affordable capital and community support go hand-in-hand to promote growth for individuals and families over lifetimes and generations. It is our mission to support financial freedom, flexibility, and the development of our communities.

 

ACT NOW!

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