Conference 7.286::dcu

716.0. "New Home Equity Credit Line Program" by SLOAN::HOM () Fri Oct 15 1993 10:47

I just received a home equity loan flyer from the DCU.  Like other banks
(and the DCU is comparing itself to a bank), it offers a home equity
line of credit for 0% over prime during the first year and will pay up
to $600 in closing close.  Some problems:

1.  DCU is behaving exactly like a bank by merely being competitive.

2.  Why can't the DCU be innovative and offer the rate to its current
    home equity loan customers? To get new rate, you need to close
    out the current line and re-apply. That incurs cost for the credit
    union as well as inconvenience for the member.

    I do know why the credit union won't do that.  There's $59M in
    home equity loans. Reducing the loan rate by 1.5% will reduce
    interest income by $ 960K.  AND income appears to be of
    paramont importance to the DCU.  Therefore, if you want a lower
    rate you can:
	- reapply,
	- leave the DCU and deal with a bank.

A much better solution would be for the DCU to be proactive and
make an effort to keep its customer.  In some cases, it means
dropping prices (or interest rate).  It takes no brains to raise
income by fees.  It does take analysis and some degree of risk to
lower prices


Gim

    Isn't the home equity rate variable? Hasn't it gone down? I don't
    quite understand what's what all the time but the interest rate I'm
    paying has gone down since I've had the loan. Or are you saying it's
    not changing fast/far enough?

    			Alfred

Alfred - if you don't mind paying the higher stay with the DCU.
If you want a lower rate, albeit for one year only, you can
	- reapply with the DCU,
	- apply elsewhere.

My point is why even give the member a reason to look elsewhere? 

Gim

    Just got my equity line approved.
    There was a minor human glitch, but they went way out of their
    way to be helpful and obliging.
    So far (I have not used it yet) I am well impressed.
    Phil