The year 2001 was a period of dramatic growth in the mortgage industry.
Mortgage loan originations almost doubled from 2000, to reach an
unprecedented level of $2.04 trillion, according to the Mortgage
Bankers Association. Mortgage rates dropped close to a historical
low, as the Fed cut interest rates 11 times in an effort to lessen
the nationwide recession.
Even with these rate reductions, the high levels of first mortgage
loan activity across all financial institutions was only partially
due to the refinancing of existing loans. According to the Mortgage
Bankers Association, 44%, or $896 billion of total loan originations
were for new home purchases and 56%, or $1.14 trillion, was for
Within the credit union system, the spread between originations
and refinancing is even more dramatic, according to a recent survey
by Callahan & Associates. The survey included responses from
39% of the total $46.6 billion in credit union first mortgage originations
in 2001. The survey finds that only 31% of the credit union originated
mortgages were for new home purchases, while the remaining 69% were
One of the primary reasons for this difference is that credit union
marketing endeavors are primarily focused on existing members as
opposed to new members moving into the community purchasing homes.
Applications from non-members averaged just 15% among survey respondents.
The vast majority of credit unions as yet make limited used of
real estate agents and independent brokers as a source for new applications.
According to the study, 18% of applications were sourced by a real
estate agent, while only 12% were provided by independent mortgage
Given the dramatically low interest rate environment in 2001 and
the first quarter of 2002, refinancing has been very important for
the experienced short-term growth. However, the February 2002 study
reveals that since most credit unions are not yet open real estate
leaders, they are not effectively positioned to continue to take
full advantage of the mortgage lending opportunity once the number
of members looking to refinance decline in a higher interest rate
Pre-order your copy of Callahan's latest research report: Credit
Union Mortgage Lending! Due out in early-April, the study provides
insight into how credit unions can take advantage of the opportunity
to become first mortgage providers to members, even as interest
rates rise. Click here to learn