Why One CU Is Holding More Fixed-Rate Loans

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PEORIA, Ill.-CEFCU has decided to keep more of its fixed-rate loans than in the recent past. The $4.5-billion CEFCU had been selling 35% to 45% of its fixed-rate products, and now is selling less than 10%.

"We pulled back on selling our fixed rates after June and have been putting more of those in the portfolio, with the capability of selling some by the end of the year," said Mark Hoffmire, VP-mortgage lending. "You might see small [rate] fluctuations, but we are not expecting rates to shoot up 2% to 3%. We looked at it from an ALM standpoint, stressed tested the portfolio against a 3% rise in rates, and determined we could hold those loans at this point and draw the interest income."

Loan processing is taking twice as long due to new regulations, Hoffmire said. CEFCU staff is working overtime and delaying vacations, pulling in employees from other areas and hiring temps with mortgage experience. "We do not offset these costs on the backs of our members," Hoffmire said.

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