Credit Unions Take a Larger Share of the Mortgage Pie

A spike in first mortgages, along with increases in new and used auto loans, helped to push credit union loan balances up to a record high in the second quarter, according to Q2 data from Callahan & Associates released Thursday.

Those three categories accounted for 81.6 percent of loan growth at credit unions last year, according to Callahan & Associates’ analysis. In Q2 2016, a 10.7 percent over-the-year increase resulted in credit union loan balances topping $834.3 billion. The previous all-time high was $809 billion, set in the first quarter of 2016. This included 5,959 credit unions which reported second quarter data.

In Q2, first mortgages accounted for 37.6 percent of total loan growth at credit unions after a spike of 9.8 percent over-the-year. The substantial increase resulted in an aggregate loan balance of more than $340.7 billion in first mortgage loans for credit unions, the highest balance ever reported for any one quarter.

“What this tells us about the industry is that credit unions are continuing to find success by appealing to and working with their members, to provide them with the financial solutions they need,” Callahan & Associates’ Director of Industry Analysis Sam Taft said. “The credit union industry has had a lot of success over the past few years expanding its presence in the first mortgage market; credit union market share has risen from 5.7 percent in June 2011 to 7.3 percent in June 2016. I believe as awareness builds, consumers are increasingly seeing the benefits of banking with credit unions. Related to this, thinking in terms of the broader market, the fact that credit unions have been able to increase their piece of the pie shows that there is both opportunity and demand in the market for financing that isn’t being filled by the large banks and mortgage finance companies.”

Originations were a heavy contributor to that increase, totaling $62.6 billion for the first half of 2016—an increase of 1.7 percent from the first half of 2015 and the highest aggregate amount loaned for the first half of any year since 2013, according to Callahan & Associates.