Mortgage Market Woes Infect CUs

ALEXANDRIA, Va. – the ongoing crisis in the mortgage markets is spreading throughout credit unions, NCUA reported yesterday.
 
Loan delinquency rates rose at the nation’s credit unions rose in the third quarter to 0.82%, from 0.62% in the second quarter, with real estate delinquencies rising even more, according to NCUA.
 
Bill Hampel, chief economist attributed the rise in delinquencies to the fall-out from the ongoing mortgage crisis, noting anecdotal evidence that credit unions in the hard-hit markets of California and Florida are seeing their members pressured by resetting adjustable-rate mortgages. “Basically, the markets of the country which have had the highest home price appreciation are where the members are being hardest hit,” Hampel told The Credit Union Journal yesterday.
 
For the third quarter, loans grew by 2.5%, while savings–traditionally soft in the period–fell by less than 1%.
 
Higher cost-of-funds combined with rising operating expenses held the key profitability ratio–return-on-average assets–at a decade-low of just 0.75%.