How Lenders Can Prepare For A Renovation Boom

Forbes

2 days ago

Mike de Vere is CEO of Zest AI.
Forget the house hunt—America is picking up the hammer instead. With mortgage rates stuck between 6% and 7% and many homeowners locked into low rates from the pandemic years, they're choosing to stay put and invest in where they are. Today's housing market isn't about expansion, it's about transformation—fueling what some experts anticipate could be a 5% gain in remodeling activity in 2025.
And who can blame them? Home prices keep rising.
The median home-sale price in the U.S. as of April 2025 was $414,000, according to the National Association of Realtors (NAR). That's an all-time high for the month of April and marks the 22nd consecutive month of year-over-year home-price increases, according to Bankrate. It's no wonder people are thinking, 'Why buy new when we can improve what we already have?'
At the same time, budgets are tight. With inflation still biting, rising unemployment and a staggering 70% of Americans living paycheck to paycheck, homeowners are looking for smarter, more affordable ways to borrow. Enter home equity lines of credit (HELOCs): cost-effective lifelines that can offer quick access to cash when it's needed most. And with summer here—the busy season for home projects—the race is on.
Currently, there is about $35 trillion in nationwide home equity, with 30% of banks and 62% of credit unions citing home equity loans as a high priority in 2025. The question isn't whether demand exists, but whether financial institutions have the agility to capture it responsibly. In this high-stakes season, only the lenders that can move quickly, adjust intelligently and make confident decisions will win, all without compromising risk.
The Cost Of Sitting On The Sidelines In Uncertain Times
In times like these, playing it safe is playing to lose. Lenders who delay updating their strategies risk not only missing out on market share but also letting down the communities they serve.
The most successful institutions aren't the ones that slam the brakes on lending when times get tough. They're the ones who have their hands on the steering wheel, adapting intelligently to maintain control over policies and make quick adjustments. These institutions are especially prepared to tackle surging demand, especially during peak seasons.
Artificial intelligence (AI) in lending isn't new. Machine learning underwriting models have been helping lenders make smarter, more efficient decisions for years, but what lenders need from AI today is very different than even just a few years ago. What's critical now is actual performance, intelligence with actionable insights, transparency and ongoing monitoring.
• Do we have enough intelligence to make impactful changes, confidently?
• Do we have inherent and direct control over our policies and cutoffs?
• Can we take action quickly, or are we slow movers who adjust policies after delinquencies emerge?
• Are our credit and risk teams empowered by meaningful data and model performance?
• Do we have the kind of deep intelligence that allows us to plan, not just react?
AI-powered lending solutions are helping answer these questions, increasing loan processing efficiency by up to 70% in some cases, while providing the insights needed for strategic decision-making. This isn't just about speed, it's about responsible lending that protects both institutions and borrowers.
In this economy, intelligent agility is your superpower. AI is a tool that can help unlock it.
A Checklist For Lenders For Renovation Season
With renovation season heating up, lenders need more than speed. They need smart, swift decision-making. Here's lenders' three-step renovation season gut check:
Check your agility: How quickly can you adjust lending policies when conditions change?
Go beyond the basics: Do your tools provide actionable insights beyond basic approval/denial decisions?
Scale with confidence: Is manual underwriting slowing you down? Can AI-automated underwriting help you make more accurate, consistent decisions at scale?
Institutions that nail this trifecta won't just weather the storm, they'll be positioned to thrive during the coming renovation surge. In today's economic roller coaster, control is your seat belt.
However, not every lender has the tech horsepower or in-house data scientists ready to build a safe and sound ride. Instead, they can consider partnering with companies to access tools like AI-automated underwriting, lending intelligence and fraud protection. These AI tools can help maintain portfolio health while extending responsible financing options to homeowners looking to upgrade their nests.
The Path Forward: Balancing Caution With Opportunity
Let's be real: 2025 won't be smooth sailing. Overly cautious? You'll leave opportunities unexplored and customers underserved, while inadequate risk assessment jeopardizes institutional stability. Not cautious enough? You'll invite risk.
But lenders who balance this caution with clarity will be set to come out ahead. For lenders committed to serving their communities responsibly through uncertain times, the message is clear: Equip your team with tools that enable quick, confident decision-making. Your institution's resilience and your customers' financial well-being depend on it.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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