Credit unions punching above their weight on mortgage lending: Report

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Credit unions accounted for 7.1% of mortgage originations in 2018, but claimed 12.3% of total mortgage loans by pulling in an outsized percentage of “relationship-based” lending categories.

According to research by Callahan & Associates based on recently released Home Mortgage Disclosure Act data, there was nearly $2.0 trillion in total mortgage production last year, of which CUs held $142.2 billion. Banks and HUD lenders, also known as mortgage finance companies, accounted for 47.2% and 45.6% of loan origination balances, respectively.

The balances include closed-end purchases, refinances, and home improvement loans, as well as open-end lines of credit – a new category mandated by HMDA for 2018.

As mortgage rates declined in the final quarter of 2018, many borrowers refinanced their loans. As a result, purchase mortgages accounted for just 61.8% of all mortgages originated last year, slightly more than $1.2 trillion.

Of credit union mortgage loans, purchases accounted for only 51.9%, Callahan noted. However, refis made up 31.6% of CU mortgage production, with home improvement loans (8.7%) and “other” mortgages (7.7%) showing solid support.

“As rates ease in the back half of 2019, credit unions are well positioned to take advantage of shifting demand for these non-purchase loans,” Sam Taft, AVP of analytics and business development at Callahan & Associates, said in a statement.

Nationally, 79% of mortgage loans were for a principal residence, compared to 92% of credit union mortgages. Other mortgages were used for secondary residences or investment properties.

“With the new HMDA rules for open-end loans, more insight was provided for credit union real estate lending and a more complete picture was painted on how credit unions impact the mortgage industry,” Taft said. “These loans are disproportionally weighted towards members with existing relationships, which is a credit union specialty.”

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Mortgages HMDA Originations Refinance Home equity loans HUD