U.S. Bank Extends Home-Improvement Loan Terms to Combat Affordability Concerns
As affordability becomes a growing concern for many American households, U.S. Bancorp is extending its home-improvement loan terms to help borrowers manage their monthly payments. The bank’s parent company, which manages $692.3 billion worth of assets, announced that it would now offer loan terms of six and seven years to borrowers engaged in more extensive home-improvement projects. This is an increase from the previous five-year term.
Emily Hartye, the head of U.S. Bank Avvance and point-of-sale lending, stated, “By extending loan terms for home improvement purchases, we’re helping merchants tackle affordability challenges head-on, drive higher conversion, and deliver financing experiences customers can trust.”
Affordability Concerns Threaten Home-Improvement Market
Experts warn that growing affordability concerns could impact the home renovation industry. This worry was highlighted when Home Depot, a leading supplier of renovation materials, reported a 3.8% decline in sales between November and January compared to the same period a year earlier.
A study by the Pew Research Center found that in January, 71% of Americans were very concerned about the cost of healthcare, 66% about the cost of food and consumer goods, and 62% about the cost of housing. The recent war with Iran has further compounded these worries by sending gasoline prices skyrocketing.
Home Equity Gains Could Offset Rising Costs
Despite these challenges, increased home equity resulting from house-price gains could provide homeowners with the means to finance renovation projects. This was the view expressed by Robert Dietz, the Chief Economist of the National Association of Home Builders, during a speech at the International Builders Show in Orlando, Florida in February.
“The surge in home equity has allowed more homeowners to finance remodeling projects that meet their needs, which include growth for aging-in-place remodeling projects,” Dietz said.
Surge in Home-Improvement Spending Presents Opportunities for Lenders
Home-improvement spending surged during the 2020-2021 COVID pandemic and remains high, providing lenders with a lucrative niche opportunity. A report by the Joint Center for Housing Studies at Harvard University estimated that annual remodeling spending jumped from $404 billion in 2019 to $611 billion in 2022 and has stayed above $600 billion each year through 2025.
In response to this boom, U.S. Bancorp launched its Avvance buy-now-pay-later platform, which offers loans for home improvements and other spending categories, in October 2023. The platform has seen strong month-over-month volume growth and a growing merchant base, according to a U.S. Bank spokesperson.
Other Lenders Capitalizing on Home-Improvement Spending Surge
U.S. Bancorp is not alone in seeking to capitalize on the surge in home-improvement spending. Truist Financial spent $2 billion in 2021 to acquire Service Finance Company, a point-of-sale home-improvement lending platform based in Boca Raton, Florida. In 2024, First National Bank of Omaha rebranded AmeriFirst as Slice after acquiring the home-improvement lender and servicer and is projecting 30% loan growth in 2026.
San Francisco-based LendingClub partnered with Wisetack, a home-remodeling-focused financing site serving approximately 40,000 contractors, in November. Around the same time, New York-based Medallion Financial hired a team of home improvement lenders from Regions Financial to stimulate its lending in the space.
U.S. Bank Partners with Skeps to Broaden Access to Longer-Term Payment Options
Besides extending loan terms, Avvance has also signed an agreement with Skeps, a UK-based fintech that connects lenders with contractors and point-of-sale borrowers. “Skeps’ book of business and platform reach, paired with U.S. Bank’s trusted lending and servicing capabilities, create a strong foundation for growth by broadening access to longer‑term payment options,” the U.S. Bank spokesperson said.
Hatch Bank in San Marcos, California, also announced in January that it had partnered with Thrive, a financial technology platform focused on the remodeling industry, to serve as an embedded lender. Hatch Bank had already partnered with Wisetack, marking the Thrive arrangement as an expansion of its activity in the home-improvement space.
As affordability concerns cloud the future of the home-improvement market, extended loan terms like those offered by U.S. Bank could provide a much-needed solution for many American households. By providing longer-term payment options, lenders not only help borrowers manage their monthly payments but also ensure the continued growth of the home-improvement market.
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