November 3, 2026
Builder confidence just hit a 14-year low and mortgage rates are back above 7%. For credit unions, the smartest home lending strategy for 2027 may be the homes your members already own.
“The customer is always right” may be an old adage, but homebuilders are learning it all over again. According to last month’s report, American homebuilder sentiment is at its lowest point since 2012. The NAHB/Wells Fargo Housing Market Index tracks three inputs to gauge the health of the housing market, and in October all three fell to near-record lows. Given how the year has unfolded, that shouldn’t surprise anyone.
A strong start that hid a weak purchase market
2026 started optimistically for mortgage lenders. With the 30-year fixed averaging 6.11% in the first quarter, agency mortgage securitizations reached $333 billion, up from $250 billion a year earlier. After two difficult years, it looked as though the market was finally turning for credit unions.
But the devil is in the details, and while the overall numbers seemed promising, a closer look showed that purchase volume was flat and refinancing drove nearly all growth, up 132% year over year. As 2026 progressed, originations declined almost 5% through Q2, then fell a further 16% in Q3.
Renovation is the new relocation
It’s clear that people are not moving, but their appetite for bigger or better homes hasn’t disappeared, and credit unions that act on that demand stand to benefit.
Whether it’s a finished basement, a dream kitchen, an accessory dwelling unit or another big project, those major renovations take major capital. Home equity products are one answer, and HELOC balances have now grown for 17 consecutive quarters. Home improvement loans are the natural complement: typically unsecured and conveniently originated at the point of sale through contractor networks.
Liquidity may arrive before loan demand does
Home improvement lending can also be a vital balance sheet tool in the year ahead. Industry experts predict loan growth holding around 5.5%, below the industry’s 7% long-run average, while savings growth runs faster. This means that liquidity may return at scale before loan demand fully does, so credit unions need a deployment strategy in place sooner rather than later.
The same forecasts suggest where growth will come from: real estate and business lending are expected to lead the way.
Put your home lending strategy in motion
Homeowners are sitting on more than $34 trillion in equity. Builder confidence is at a 14-year low, resale inventory is locked in place, and credit union balance sheets are regaining the capacity to lend. The first quarter showed how quickly credit unions can capture volume when the right products are front and center.
For any credit union, of any size, in any market, home improvement lending belongs in the 2027 plan and beyond.
LendKey helps credit unions modernize and scale their lending programs, including home improvement loans. Reach out to our team to see how we can help you put your members’ equity to work and grow your loan portfolio.