What Effect Will Recent Financing Changes Have on Vacation Ownership?

Dear Vacation IndustryFriends,

See: https://www.foxbusiness.com/personal-finance/capital-one-discover-clamp-down-on-lending

In a corollary, Whitebriar sees the larger  Hypo/Warehouse Receivables Lenders and Portfolio Securitization underwriters tightening their consumer credit criteria.  We expect that this trend will accelerate over the next few months.

At the same time, a cooling economy and higher interest rates should push more buyers into ‘affordable’ vacations – a good opportunity for timeshare marketing and sales, and for well-priced fractional offerings.  Perhaps not so good for second home buyers.

See also: https://bankingjournal.aba.com/2018/07/consumer-delinquencies-rise-in-first-quarter-of-2018/

Although Q2 was better, initial indicators show that Q3 2018 was a return to deterioration in revolving and unsecured consumer credit. As a result, less availability is pushing more consumer timeshare & fractional purchasers towards developer financing.  We expect that this trend will continue in Q4 of 2018 and Q1 of 2019.

At the same time, the more permissive regulatory landscape in many states, combined with some federal curtailments on the scope of CFRB, give Developers an opportunity for increased profits on interest income and spread.  As we have seen before, the Vacation Ownership industry and Portfolio originations provide a great hedge against rising rates and a more challenging economy.

As always, please let me know if Whitebriar can be helpful in financing, underwriting or placing your Portfolios, or if we can advise on private equity, CRO or Servicing & Collections.

Cordially,

-Harry-