How much should credit unions invest in their mortgage lending engine? The answer depends on the market they serve. Activity across the five NCUA regions varies, with credit unions taking advantage of different opportunities in different areas across the country.

To tease out what’s happening in what market, start with HMDA* data.

There are ample ways to slice and dice HMDA data to gain a deeper understanding of the market. Callahan & Associates uses MortgageAnalyzer to analyze how the country as well as individual NCUA regions are performing in the mortgage originations.

Check out what Callahan learned about why U.S. consumers are taking out home loans. Then log into MortgageAnalyzer to learn more about your own mortgage market.

United States

Lenders categorize HMDA origination reporting based on loan type (read more in Part 2 of this series) as well as loan purpose. The latter captures whether loans are for purchase, refinance, or home improvement.

Purchase loans at U.S. credit unions increased 11.3% year-over-year; however, as a percentage of first mortgage originations at credit unions, these loans decreased for the second consecutive year to 43.9% as of year-end 2016.

It is refinancing loans that account for the majority 49.5% of credit union mortgages. Despite their popularity at credit unions, though, the industry’s market share for this segment decreased from 6.6% in 2015 to 6.4% in 2016.

Of the three purpose categories, home improvement offered the highest market share for credit unions. Cooperatives funded 10.4% of these loans in 2016.

New England

Credit unions in the NCUA New England Region posted strong growth across all mortgage loan purposes. Purchase, refinance, and home improvement originations increased 15.9%, 20.0%, and 30.2%, respectively. Refinancing loans made up the highest portion of mortgage lending at credit unions in the region 48.2% with balances of $13.0 billion.

Massachusetts credit unions refinanced nearly $900 million more in 2016 than they did in 2015. Their originations of $2.4 billion represent a year-over-year increase of 30.9%. Michigan credit unions made $3.2 billion in purchase mortgages last year, topping New York for the first time in recent memory. Finally, Vermont cooperatives posted the highest annual growth 63.8% in home improvement loans for any state in the region.

Western

Refinances accounted for 57.5% of all mortgage originations for credit unions in the NCUA Western Region. That is a significantly higher percentage than in any other region. Two states, Idaho and Hawaii, posted notable annual refi growth of 43.9% and 40.7%, respectively. Collectively, refinances in the Western Region were up 21.1% in 2016 to $23.8 billion.

Purchases accounted for more than one-third, 35.7%, of the region’s credit union mortgage portfolio. Purchase originations increased 8.0% in 2016 to $14.8 billion. All but two states, Hawaii and Alaska, posted growth in purchase loan originations, but credit unions also turned out a strong performance in home improvement loans. Western credit unions originated $2.8 billion in improvement loans that’s 19.8% more than in 2015. Alaska credit unions more than doubled their home improvement origination activity from 2015, expanding 121.0% to $64.7 million. ContentMiddleAd

Central

Despite the performance of Western Region credit unions, it is cooperatives in the NCUA’s Central Region that earned top honors for fastest growth in home improvement loan originations. There, home improvement originations increased 30.1% year-over-year to $1.3 billion as of Dec. 31, 2016. Every state in the region posted growth in home improvement loans. Eight states recognized annual growth higher than 30.0%.

Funding for purchases neared $11.9 billion for Central Region credit unions, and at 49.1%, purchases held the largest share of credit union mortgage originations. Purchase originations at Texas credit unions increased 13.7% to nearly $4.0 billion. Lone Star State cooperatives reported the largest purchase origination total, whereas credit unions in the Hawkeye State reported the fastest annual growth 33.8%.

Refinance loans at Central credit unions rose 14.6% in 2016 to $11.0 billion. This was nearly half, 45.4%, of all mortgage loans in the region.

Southeast

Credit unions in the NCUA’s Southeastern Region posted the highest annual growth in purchase loan originations 18.7% than any other NCUA region. Total funding reached $11.8 billion there, and purchase mortgages accounted for 54.0% of the region’s credit union mortgage loans. Although all but three states posted purchase growth higher than 18.0%, Kentucky topped the group with an 80.8% increase in purchase originations since 2015.

Southeastern credit unions reported growth in all mortgage types refinancing and home improvement loans were up 17.8% and 25.0%, respectively. Refinancing balances reached $8.8 billion, up $1.3 billion since 2015. Florida credit unions reported the largest balances of refinancing originations $2.4 billion as of year-end 2016.

Mid-Atlantic

Home improvement loans increased more for credit unions in the Mid-Atlantic Region than for any other region. Credit unions there posted an annual increase of 42.3% for that loan purpose. Home improvement loans accounted for 9.2% of all credit union mortgage loans for the region, which is a larger percentage of total originations than for any other region in the country. Home improvement originations increased faster at New Jersey credit unions 354.1% to hit $404.3 million than at any state in the country.

At 49.5% of mortgage loans, refinance mortgage loans made up the largest percentage of the portfolio for Mid-Atlantic credit unions. Purchase mortgage originations grew 9.1% in the past year to surpass $7.9 billion. At $2.7 billion, credit unions in Virginia posted refinance origination growth more than $1 billion, more than any other state in the region. Ohio reported the fastest growth of purchase mortgage originations. Purchases funded in the Buckeye State expanded 24.4% year-over-year.

Make The Most Of HMDA Data

Leveraging HMDA data, MortgageAnalyzer helps credit unions identify market leaders and analyze their performance against other credit unions, banks, and mortgage lenders.

* The Federal Financial Institutions Examination Council released 2016 HMDA data earlier this fall. The Home Mortgage Disclosure Act applies to most credit unions, banks, and mortgage finance companies that originate mortgage loans, and HMDA data sheds light on the mortgage market across states, communities, and neighborhoods.