Wescom Rolls Out Fixed-Rate HELOC
Southern California credit union says the feature is designed to allow members to tap home value with less risk from rising rates.
Wescom Central Credit Union of Pasadena, Calif. has launched a home equity line of credit with a fixed rate.
Jeff Smrcka, Wescom’s VP of consumer lending, said the fixed rate feature was designed to allow its members in southern and central California to tap into their home’s equity while safeguarding the loan from rising interest rates.
“With a 0.50% APR rate discount on converted balances, our members can plan their finances with a degree of certainty, making long-term financial planning easier and giving them greater peace of mind when it comes to preparing for upcoming projects in their personal lives,” Smrcka said.
A Nov. 14 news release from the southern California credit union said the Fixed Rate Feature HELOC gives members the ability to lock outstanding HELOC balances into a fixed rate, on a term of their choosing, without having to apply for or take out another loan “potentially paying hundreds of dollars in closing costs.”
The offering allows for multiple converted balances (up to three at any one point) and gives the borrower the flexibility of still having an open line of credit during their draw period, “providing the best of both worlds: revolving and installment in one.”
Like many credit unions, NCUA data shows Wescom ($5.9 billion in assets, 227,345 members) has seen its first mortgage originations fall sharply this year. However, it has performed better than average in increasing originations for second liens.
Wescom Central originated $156.1 million in home equity lines of credit and other second liens in the nine months ending Sept. 30, up 2.5% from the first nine months of 2022.
However, Wescom’s first liens fell 66% to $152.6 million in the first nine months, and all other loans fell 7.9% to $383.7 million.
NCUA data for all credit unions shows first mortgage originations fell 53% in the first half, while second lien production fell 17%.
NCUA will provide third-quarter data for all credit unions by early December, but originations for the Top 10 credit unions, which indicate the direction for all credit unions, shows first liens fell 18% for three months ending Sept. 30, while second liens fell 29%.
Wescom’s net income was $5.4 million in the three months ending Sept. 30, or an annualized return of 0.36% of average assets, up from 0.27% a year earlier, but down from 0.51% in the second quarter and 0.56% in the first quarter.
Wescom held $3.1 billion in loans and $4.3 billion in savings on Sept. 30, or a loan-to-share ratio of 73%. The loan-to-share ratio has risen from 61% a year earlier and 72% in June as loan growth has slowed and savings have fallen.
CUNA shows the loan-to-share ratio for all credit unions was 85% on Sept. 30, up from 79% a year earlier and 83% in June.
Wescom’s net income was $5.4 million in the three months ending Sept. 30, or an annualized return of 0.36% of average assets, up from 0.27% a year earlier, but down from 0.51% in the second quarter and 0.56% in the first quarter.