Considering that the first quarter of the year is historically a slower quarter for loan originations, credit unions are already setting themselves up for a record year.
Loan originations at the 7,035 credit unions currently reporting data in Callahan & Associates’ FirstLook program are at the highest volume recorded in the first quarter. FirstLook data currently incorporates 99% of the industry. Originations during the first three months of 2012 totaled $72.o billion, up 25.3% over the same time period last year. This year-over-year growth is significantly higher than the 13.3% in 2011.
First mortgage and consumer loans helped fuel the strong growth in originations. First mortgage originations totaled $26.0 billion through March 31, and they experienced a 47.1% dollar increase from the $17.7 billion lent in the first three months of last year. Due to historically low rates for first mortgages, these record-breaking originations are allowing members to save hundreds of millions in interest rate costs over the life of the loans.
First mortgages comprised about 36.1% of all originations. Only 30.7% of originations were first mortgages in the first three months of 2011. First mortgages as a percent of originations varied from state to state, with Arkansas noting only 14.4% of their originations in the first mortgage category, while Vermont reporting just more than 71.0%.
A total of 160,746 first mortgage loans were granted in the first three months of 2012, versus 112,898 in the same time period last year, a 42.3% increase. The average loan balance rose to $161,549 in the first quarter of 2012, up from $156,390 the same quarter last year.
Of the first mortgages, $13.4 billion, or 51.6%, were sold to the secondary market for balance sheet management. Because of this – and due to members refinancing their loans at very low rates and making mortgage prepayments – first mortgages on the balance sheet increased by 4.1%.
Fixed-rate first mortgages with a term greater than 15 years were the most common type of first mortgage, making up 46.6% of the total fixed-rate loans in 1Q 2012. Fixed-rates with less than 15 years made up most of the remaining loans, accounting for 34.7% of the $26 billion originated.
The consumer loans segment, including credit cards, new and used auto loans, and student loans, also had significant growth. Consumer loan originations rose 16.6% to $39.0 billion but declined as a percent of total originations to 54.1% in 1Q 2012 from 57.9% 1Q 2011.
The record-breaking originations in the first quarter resulted in total loan balances outstanding at these 7,035 credit unions in an increase 2.7%, a positive reversal from the 0.9% decrease they reported last year.