Mortgage Lending By The Numbers (1Q17)

In the past five years, not only the types of mortgage originations but also the average size of first mortgages have changed.

 
 

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In the first three months of the year, first mortgage originations increased 15.9% to $30.9 billion and credit unions set a record high, 8.6%, in market share.

Credit unions are showing a greater propensity to offer a balloon/hybrid style mortgage, versus a traditional fixed-rate mortgage, than in the past. Across the industry, 22.4% of all first mortgage originations in the first quarter of 2017 were balloon/hybrid style, compared with 9.8% in 2013.

In the past five years, not only the types of mortgage originations but also the average size of first mortgages have changed. In the first quarter of 2012, the average first mortgage was approximately $129,000. This past quarter, that balance was closer to $143,000. Credit unions in the NCUA’s Western region lead the industry at $214,700 per mortgage. That was 23.1% higher than the secondhighest region, the Mid-Atlantic, at $174,400.

In total, the industry sold 35.1% of its first mortgage originations in the first quarter. Not all asset bands sold originations at the same rate, however. Credit unions with more than $1 billion in assets sold 37.2% of their first mortgage originations, whereas those with less than $20 million in assets sold 20.0%. Sales to the secondary market have become the new normal for the industry and have hovered between 35% and 40% for the past nine quarters.

Despite growth in lending, the asset quality for first mortgages has steadily improved in the past few years. Delinquency was 0.44% as of first quarter 2017. First mortgage losses, represented by net charge-offs, stood at 0.03%.

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

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Click the graphs below to enlarge and then continue reading to see how Altra FCU is rebuilding community one mortgage at a time.

Large lenders turned out notable success in auto lending throughout the rst quarter of 2017, driving the average auto balance growth rate to 13.8% for the industry. Median auto growth was 6.3%. The top 20th and bottom 20th percentiles expanded 19.3% and -4.9%,

CASE STUDY

ALTRA CREDIT UNION

Altra Credit Union is participating in a loan consortium that’s working to rebuild its hometown’s downtown while keeping graduating college students at home.

La Crosse, WI, is home to three institutions of higher learning and is regularly ranked by national publications as a hot spot for quality of life and careers. It’s also aging and in need of an economic facelift.

One program involved in that is the non-profit La Crosse Promise. It offers families who build, buy, or renovate a home with a value of at least $150,000 in one of four neighborhoods with a college scholarship worth up to $50,000 for students attending a school in the Badger State.

The neighborhoods are older areas with low housing availability and little pride of ownership among the residents, says Dennis Herricks, Altra’s vice president of real estate services.

With the understanding that owning a home can be expensive, La Crosse Promise connects perspective borrowers to a loan consortium of 11 financial institutions, including Altra. 

Other perks include waiving mortgage insurance. Altra is comfortable underwriting a loan with a loan-to-value (LTV) as high as 90 to 95% without charging mortgage insurance.

The credit union is willing to take on the extra risk inherent in a high LTV mortgage because making higher education more affordable and rebuilding dilapidated areas is good for the community.

“Borrowers know what they are doing,” Herricks adds. “They know the benefit, and they’re committed to it.”

Altra has closed two loans from the program — the first for $161,000 and the second for $158,000. Each of the loans went to two-child families, and each child is eligible to receive up to $25,000 if they attend a Wisconsin-based post-secondary school.

Herricks stresses patience when working with a program like this.

“There’s no quick fix,” he says. “It takes effort. It takes time. It takes work. And it takes dedication to a cause.”

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RETURN TO INDUSTRY PERFORMANCE BY THE NUMBERS 1Q 2017

 

 

 

July 1, 2017


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