Credit Card Company Adds Home-Equity Business
Looking to benefit from rising home values, credit card lender Discover Financial Services announced it will begin offering home-equity loans in the second half of this year.
Discover says that about 80 percent of its customers are home owners. It plans to offer fixed-rate, closed-end loans valued between $25,000 to $100,000. The home equity loans will first be marketed to existing customers before eventually becoming available to others.
In recent months, banks have been reporting increases in home-equity lending due to the rise in home values that has given more home owners equity.
“My view is that in many places in the country, the housing market is finally stabilizing,” says David Nelms, chairman and chief executive of Discover. “I think that there are people who do have equity in their homes, and it’s a much more careful time today than it was during the [2005-2007 housing market].”
Last year, Discover began originating mortgages online. Its home-loan business has originated more than $2 billion in mortgages to date.