BenchMark Consulting International Announces Key Findings of the Consumer Bankers Association's (CBA) 2001 Home Equity Study.

Business Editors

ANAHEIM, Calif.--(BUSINESS WIRE)--Dec. 12, 2001

BenchMark Consulting International, an international process management operations consulting firm, announced the preliminary findings of the company's compilation and analysis completed for the Consumer Bankers Association's (CBA) 2001 Home Equity Study.

The first key finding in this year's survey results was that new bookings (newly originated loans) favored home equity lines of credit over equity loans. In fact, line dollars exceeded loan dollars by a factor greater than two to one. Half of the consumers of both line and loan products reported the need to refinance debt while one-quarter cited home improvement. According to the study, refinancing debt appears to be on the rise from about 40 percent reported in 2000 to 50 percent this year.

The second key finding is that the Internet and broker channels account for only 20 percent of new business, but represent the fastest growing sources of booked loans. For instance, comparing 1999 with 2001 results shows a three-fold increase in broker sources (from five to 15 percent) and a five-fold increase in Internet sources (from one to five percent). There is no significant difference in channel source by product line, but loans do have a slight edge over lines in these channels.

Finally, relationship penetration is down from last year. Overall, about 10 percent of deposit customers have a home equity account. This is down from last year's reported penetration level of 15 percent. However, large-sized institutions increased penetration levels from 11 percent last year to 15 percent this year. Twenty-six percent of equity borrowers have an additional consumer loan relationship, a 10 percent decrease from last year's reported percentage of 36. The effect of the shift to lines of credit may have reduced the demand for other consumer credit products based on the flexibility of the line product. The greatest success story in relationship penetration lies between equity borrowers and deposit relationships. Respondents reported 56 percent relationship penetration with averages by class size ranging from 44 to 68 percent. Medium-sized institutions reported the highest penetration rate.

The study included data from June 2000 to June 2001 and included 36 respondents (an increase of 30 percent from last year). BenchMark Consulting International analyzed the responses of participating institutions that included commercial banks, bank holding companies and thrifts and savings banks. To achieve even distribution between the classes and allow peer comparison, the classes were grouped based on the amount of home equity portfolio dollars reported. For example, the small-size class had home equity portfolios of less than $750 million, the medium-size class contained $750 million to $2 billion in their home equity portfolios, and the large-size class consisted of lenders with more than $2 billion in their home equity portfolios. The answers were then compared to previous survey results.

The CBA 2001 Home Equity Study costs $225 for CBA members and $400 for non-members. Reporters may contact Penny Hayes, BenchMark International Consulting at 770-428-8899 ext. 4189 for further information regarding this program.

About Consumer Bankers Association

The Consumer Bankers Association is the recognized voice on retail banking issues in the nation's capital. Member institutions are the leaders in consumer finance (auto, home equity and education), electronic retail delivery systems, bank sales of investment products, small business services and community development.

CBA was founded in 1919 and provides leadership and representation on retail banking issues such as privacy, fair lending, and consumer protection legislation/regulation. CBA members include 85 percent of the nation's largest 50 bank holding companies and hold two-thirds of the industry's total assets.