Mortgage Lending Driving Credit Union Growth

In anticipation of the National Credit Union Association (NCUA)’s official data release, Callahan & Associates reported they expect double-digit loan growth for the ninth consecutive quarter in Q3.

First mortgage originations have been a major driver of balance sheet growth for credit unions, and the third quarter is no different. Overall loan growth is projected to be 10.2 percent for Q3, while loan originations are expected to increase by 10.6 percent, topping $343 billion.

With an increase of 9.2 percent over the last 12 months, first mortgage balances ranked second behind only auto loan balances (13.8 percent) in Q3, according to Callahan, which had access to 90 percent of the soon-to-be-published NCUA data to make its forecasts for Q3. Loan quality improved in Q3 as well; delinquency rates on credit union loans declined by 1 basis point over-the-year for the quarter.

“Credit unions are heading into the end of 2016 with momentum in all key areas. Membership, loan, and share growth are all at or above the pace recorded one year ago,” Callahan partner Jay Johnson said in an article on CreditUnions.com. “With all this momentum, now is the time for credit unions to be ambitious and take on initiatives that will allow them to capture new opportunities.”

Recently-released Home Mortgage Disclosure Act (HMDA) data indicated that credit unions’ share of the mortgage industry held steady at 6.1 percent from 2014 to 2015 (overall, total first mortgage originations expanded by $461.4 billion, or 33 percent, to $1.8 trillion in 2015, according to the HMDA data).

“While credit unions did not see growth in market share, it is encouraging to see them maintain share in a growing market, while banks’ market share declined,” Callahan & Associates’ Director of Industry Analysis Sam Taft said. “This could be due to consumers continuing to trust credit unions with their real estate financing needs and increasing visibility throughout the country of the value proposition credit unions offer.”