WASHINGTON – Credit unions continue to sell increasing portions of their home loans as interest rates fall to decade-lows.
A new Flash Report by NAFCU shows through the first six months of the year credit unions sold 49.1% of their mortgages, compared to just 32.3% in 2008, when mortgage rates were as much as 100 basis points, or 1% higher.
"Despite the fact that a vast majority of the responding credit unions currently consider interest rate risk as a bigger problem when compared to liquidity risk (92.7%), they hold a smaller average percentage of their loans granted this year in portfolio (50.9%) than they did in 2008 (67.7%)," said the NAFCU report.
The increase in secondary market sales came after the federal government took both Fannie Mae and Freddie Mac under conservatorship last September, and as the average rate for 30-year, fixed-rate loans was plunging to 4.50%, the lowest in decades.
A majority of the credit unions surveyed (70%) said they continue to use the services of the two secondary market giants even after the government takeover. A majority of those credit unions that don’t still use Fannie or Freddie (60%) said they don’t need the extra liquidity. Only a fourth of the credit unions surveyed are using another secondary market source.
Only 15.4% of respondents said they have seen an increase in the re-default rates on modified loans over the past 12 months.
