August 5, 2026
Delinquency levels, housing prices and mortgage rates are combining to make the second half of 2026 the time to lend.
Homeownership is as much a part of the aspirational American identity as apple pie and fireworks on the 4th of July. It should come as no surprise, then, that housing is one of the largest sources of wealth in the country.
Zillow’s latest housing market analysis put the total value of America’s homes at a record $55.1 trillion, a $20 trillion jump since before the pandemic, with homeowners holding more than $34 trillion in equity. That combination of valuable ownership and tappable equity makes home-related lending a powerful asset class for credit unions looking to grow loans, mitigate risk, and deepen member relationships.
For credit unions looking to increase their real estate book, recent reports from Fannie Mae and Freddie Mac suggest that now is the time to act.
Delinquencies down but housing affordability an issue
According to Fannie Mae’s June 2026 Monthly Summary, the Conventional Single-Family Serious Delinquency Rate sat at 0.58% in June, remaining flat from the previous month and up slightly from 0.53% a year earlier. Freddie Mac’s latest results show a similar pattern: its Q2 2026 financial report put its Single-Family serious delinquency rate at 0.60%, slightly above 0.55% a year earlier. Both figures remain at or below pre-2020 levels, a sign that the mortgage market has normalized after the delinquency spikes that soared during the pandemic and remained relatively high over the last few years.
But while delinquency rates have lowered (Fannie’s latest rates are actually below pre-pandemic delinquencies) housing affordability has gotten exponentially more difficult since 2020.
In its 2026 State of the Nation’s Housing report, Harvard’s Joint Center for Housing Studies found existing home prices are up 54% nationwide; monthly costs on a median-priced home climbed to $3,100 in the fourth quarter of 2025, up from $1,700 in early 2020; and the income needed to afford that payment has nearly doubled, to more than $120,000 (up from $66,000 in 2020) and well above what the typical American household actually earns.
It’s clear that anybody looking to get on the property ladder will need more accessible lending products, from low down payment options to fast and easy refinancing – options credit unions are primed to offer.
Home improvement loans as an entry point
Comparing today’s market to pre-pandemic levels may feel like a stretch – six years is a long time – but with millions of borrowers locked into the low-rate mortgages they took out in 2020 and 2021, and prepayment activity at historic lows ever since, today’s loan book still carries an unusually large share of pandemic-era originations.
For precisely those reasons, moving home has become a financial nonstarter for so many, too. It takes a lot to leave behind a sub-3% deal and take on new terms at 6.7%. Instead, many homeowners are renovating in place.
This opens up yet more opportunity for credit unions, and home equity loans and HELOCs (which recently increased for the 16th consecutive quarter) aren’t the only way to participate in the home borrowing market; home improvement loans offer a lower-friction way to deploy capital, too.
Home improvement loans are typically unsecured and originated at the point of sale, and tend to attract strong borrower profiles. For example, in one LendKey credit union partnership, borrowers averaged a FICO score above 780 and household incomes over $140,000. The low risk and high yield potential of home improvement loans make them a natural complement to a credit union’s existing mortgage and home equity offerings.
Put your home lending strategy into motion
Credit unions are finding themselves in the position of serving both members who are growing their wealth exponentially and members at risk of being priced out of the housing market. It’s a crucial moment for credit unions to step up with affordable mortgage products, options to unlock equity, and multiple ways to meet financial goals.
As delinquency rates remain low and stable, and housing continues to represent an enormous share of member wealth, this is a moment to lean into lending.
LendKey helps credit unions modernize and scale their lending programs, including home improvement loans. Connect with our team to see how we can help you diversify and grow your loan portfolio.