By Ray Birch
NEW YORK—Credit unions heading into 2026 face an uncommon combination: excess capital, homeowners unwilling to move, and a deep reservoir of tappable home equity—all of which point to continued strength in home-equity lending, especially in the high-LTV segment.
That’s the view from Rick Hughes, senior vice president at NFP, who told CUToday.info he sees “another year of opportunity” for credit unions willing to carefully expand beyond the traditional 80% combined loan-to-value (CLTV) ceiling.
“We’re seeing about 10% growth this year in our insured high-CLTV home-equity business, and we expect about the same in 2026,” Hughes said. “Credit unions are sitting on capital they’re not deploying through first mortgages, and homeowners aren’t leaving their low rates. That combination sets the stage for more home improvements—and more lending.”
The Stay-Put Effect Will Drive 2026 Demand
Hughes believes two forces that powered home-equity performance in 2025 will remain firmly in place next year:
1. Virtually no mortgage-rate relief
“Most people still have mortgage rates in the 4% range,” Hughes said. “We don’t see rates coming down nearly enough to make refinancing or moving attractive. So, members are going to stay where they are.”
2. Home improvement spending isn’t slowing
That immobility is fueling one of the strongest home-improvement cycles NFP has seen.
“That’s been huge for us this year, and we see it continuing in 2026,” Hughes added. “Members are choosing to improve the home they have, not buy the next one.”
Combined, those factors create sustained demand for equity access—even at higher LTVs.
High Equity Cuts Both Ways—But Opportunity Remains
Rick Hughes
Hughes said the sheer volume of home equity in the market is both a benefit and a barrier for credit unions.
“There’s so much equity out there that borrowers can often get what they need at 80% LTV or less—that’s the downside for high-LTV programs,” said Hughes, whose company offers an equity-protection program. “But by the same token, plenty of borrowers still need to tap deeper, and credit unions can safely serve that demand. There’s real opportunity for them to grow their books.”
For credit unions that have been “conservatively parked” in low-risk territory since COVID, Hughes said the coming year may warrant more flexibility.
“What we’ve seen is credit unions tightened underwriting during COVID…and they haven’t really loosened it,” he explained. “They’re writing good quality paper—they’re just doing it at 80% or below. With the capital they’re sitting on, this is an opportunity to expand safely.”
No Housing Bubble On The Horizon—But Some Cooling
Even as some markets flatten or cool, Hughes does not see signs of a 2026 home-price shock.
“We don’t see a housing bubble,” he said. “Supply is still relatively low. Values in some markets are coming down, others are flat, others are up—but overall, appreciation has just slowed to a more reasonable pace. Nothing suggests a large drop.”
That stability supports credit-union comfort with higher-LTV lending, Hughes added.
Delinquencies Up From Pandemic Lows—But Flattening
NFP’s insured portfolio has seen some upward movement in delinquencies and losses, mostly tied to loans from 2022 and early 2023, Hughes noted. But the trend has stabilized.
“Our 30-plus-day delinquency rate is still substantially below 1%,” he said. “It has gone up from the ultra-low pandemic years, but in 2025 it began to flatten—and in 2026 we expect it to stay flat.”
Losses have risen modestly, as well, but remain within normal risk tolerances.
“We don’t see delinquencies rising materially in 2026,” Hughes said. “They won’t return to pre-pandemic lows, but the levels we’re seeing are still very manageable—especially for insured high-CLTV programs.”
Advice For Credit Unions: Use Your Capital—But Stay Disciplined
For Hughes, the message for credit unions heading into 2026 is straightforward:
1. There’s room to take prudent risk.
“This is an opportunity for high-LTV lending,” he emphasized. “Credit unions can expand LTVs without relaxing underwriting. They’ve proven they can write solid loans with the COVID-era guidelines.”
2. Follow the same disciplined protocols.
“They don’t have to vanguard new lines,” Hughes said. “They can use the same guidelines they used during COVID—just apply them at higher LTVs.”
3. Put idle capital to work.
“Credit unions told us for years they didn’t have excess capital,” he noted. “Now they do. High-CLTV home equity is a safe, productive way to deploy it.”
4. Don’t wait to act.
“We expect demand to hold steady next year,” Hughes said. “The earlier credit unions prepare, the more effectively they’ll capture it.”