Credit unions taking a bigger bite of originations

by Donald Horne14 Aug 2015
Credit unions are proving that they are more than just a flavor of the week, as those looking for mortgage loans are turning to them in greater numbers.

“Credit unions are becoming bigger players in the mortgage loan market,” says Nidhi Verma, director of research and consulting in TransUnion’s financial services business unit, “something that may serve them well in the future as the housing market continues to recover.”

According to research conducted by TransUnion, credit unions’ share of mortgage originations has increased from 7 per cent in the first quarter of 2013 to 11 per cent in the first quarter of 2015.

“Homeownership rates as a whole may be down in the U.S.,” Sageworks analyst Libby Bierman told MPA, “but these credit unions – along with banks that provide mortgages – are helping those potential borrowers who are interested in owning.”

Of 90 credit union executives who were surveyed, nearly six in 10 respondents stated the number of mortgage originations provided to their members has grown over the past two years.

Also, credit unions experienced 25% growth in non-prime mortgage originations in Q1 2015 while the rest of the industry grew at 4%.

However, traditional mortgage lenders appear mostly unfazed by the survey results, seeing strong numbers and opportunities for growth, especially in key markets like California.

“I am pleased with these results and am looking forward to an even more impressive showing next year,” says Victor Ciardelli, president and CEO of Guaranteed Rate, one of the 10 largest retail mortgage lenders in the country, commenting on the strength of the reverse mortgage market.

The growth numbers should viewed in the larger picture of an overall decline in mortgage originations in the last few years – a decline that has been less dramatic for credit unions.

“As the U.S. economy continues to recover, non-prime mortgage originations are growing for both credit unions and the rest of the industry,” says Verma. “Historically, credit unions have seen lower delinquency rates than the rest of the industry, and their focus on membership expansion makes them well-positioned to take advantage of this growth.”

While TransUnion data show that credit union mortgage originations decreased 24% between 2012 and 2014, originations have actually increased 35% in the first quarter of this year compared to 2014.

The rest of the market experienced a 48% drop between 2012 and 2014 and only experienced 15% growth in the past year (Q1 2014 to Q1 2015).



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