Strategies Offered For Dealing With Deposit Inflow
MADISON, Wis. – Given the threat of increasing deposits as consumers seek CU safety as stocks fluctuate wildly, Dave Colby is offering some advice on how to keep the loan-to-share ratio from slipping further south.
“Cherry pick low loan-to-value mortgages,” advised CUNA’s chief economist. “This is a great opportunity. The aggressive credit unions are searching for refis from members who have 60% to 70% equity in their homes and who want to take advantage of interest rates that are moving lower. But most members won’t walk in the door because they think the costs are too high to refinance. You have to call them.”
Colby suggested members in their early 50s who have a great deal of equity make good targets, and to talk to them about ways to reduce the duration on their loan. “Say you will keep their payments the same but drop two years off their remaining term.”
Colby also recommended lowering members’ monthly mortgage payments to assist with cash-flow needs, such as members concerned about their 401K and want to find ways to contribute more toward those savings. “You are working out the collateral risk if you get people with 60% to 70% equity and you minimize your duration risk. You are adding basis points to the bottom line.”