2024 has been a transformative year for the lending industry, and with so much having shifted, it’s one worth recapping. So, let’s take a look at the highlights and lowlights that defined the year in lending.
2024 was marked by rising interest rates, capital market constraints, and evolving borrower behavior, but through these challenges, one theme has emerged clearly: liquidity is king. Many lenders, particularly credit unions, responded by recalibrating their strategies to ensure resilience and sustainability in an ever-shifting landscape.
At the forefront of these adjustments was the need for diversification. Traditional pillars like mortgage and auto refinancing, once reliable drivers of growth, saw sharp declines this year. Rising interest rates dampened home mortgage refinance activity, while asset value inflation following COVID-19 drove down auto refinance volumes. Lenders who leaned into alternative products, such as qualified home improvement loans, found a much-needed bright spot in their portfolios. These products continued to perform strongly, even as other areas faced increased delinquency.
This contrast was especially evident in the performance of unsecured fintech loans. The higher rate environment placed significant pressure on debt consolidation and other direct-to-consumer products, leading to rising delinquency rates. By comparison, secured lending products like HELOCs have proven to be more stable and reliable, offering lenders a clear path to mitigating risk while meeting consumer demand.
Beyond diversification, 2024 also saw a renewed focus on community engagement. Many credit unions turned their attention to small businesses, recognizing the opportunity to build stronger relationships through innovative financing tools. Free financing programs for small businesses not only provide a unique value proposition but also position lenders as key partners in their local economies, fostering growth and mutual success.
On the consumer side, we observed a notable shift in behavior. Despite holding significant cash reserves, borrowers are increasingly opting to finance purchases rather than deplete their savings. This shift in mentality reflects growing consumer confidence in borrowing at reasonable rates, creating new opportunities for lenders who can meet this demand with flexible, borrower-friendly solutions.
Looking ahead to 2025, the lessons of this year provide a roadmap for the future. By embracing diversification, fostering deeper community connections, and staying attuned to consumer preferences, lenders can navigate uncertainty and thrive in any market environment. At LoanStar, we remain committed to supporting you in these efforts, providing the tools and insights necessary to achieve your goals and serve your communities effectively.
Thank you for your partnership throughout this dynamic year. Together, we’ve overcome challenges and identified opportunities that position us for even greater success in the year ahead. Please don’t hesitate to reach out to our team with questions or ideas for how we can support your evolving strategies.
Here’s to a strong finish to 2024 and a successful 2025!
Best regards,
Andy Turner
