Credit unions experienced phenomenal growth in 2016, and particularly in the third quarter, surpassing 106.2 million members and $1 trillion in deposits during Q3, according to the National Association of Credit Unions (NCUA) [1].
The delinquency rate for fixed real estate at federally insured credit unions was down by 12 basis points over-the-year in Q3, from 65 points to 53 points, according to the NCUA. The overall delinquency rate was 77 basis points, an over-the-year decline of 1 basis point.
First mortgage originations were a major driver of balance sheet growth for credit unions in Q3, according to analysis from Callahan & Associates. 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.
“By almost any measure, America’s credit unions as a whole continue to grow,” NCUA Board Chairman Rick Metsger said. “Rising credit union membership has boosted deposits, and loans have continued to grow at a double-digit pace. At the same time, the overall delinquency rate has held steady, and the shift away from long-term investments has continued. Despite these positive trends, federally insured credit unions must guard against risks on the horizon like rising interest rates and regional economic downturns, particularly in energy-producing states.”
The growth experienced by credit unions has created a greater demand for outsourcing mortgage origination services, according to Altavera Mortgage Services. Altavera reported that demand for its outsourcing services was 30 percent higher in Q3 compared to last year, primarily due to increased compliance costs and higher mortgage origination volumes. The CUNA Mutual Group reported in September that first mortgage originations at credit unions grew by 3.3 percent and home equity loans and second mortgage originations grew by 20 percent over-the-year in the first half of 2016, according to Altavera.
“Reports early this year indicated that the credit union market was experiencing atypical growth, and our own observations confirm it,” said Altavera chief operating officer Debora Aydelotte.