Quarterly First Mortgage Originations Up Nearly 45%

The third quarter volume is the strongest quarterly period of first mortgage originations in more than a year.


According to home sales data from the Census Bureau and the National Association of Realtors, both new- and existing-home sales were on the rise during the second half of 2010. Credit unions, likewise, recorded a number of successes in their own real estate lending portfolios. Most notably, quarterly first mortgage originations increased nearly 45% from volume originated during the second quarter.

The credit union system originated $24.6 billion in first mortgages during the third quarter 2010; this a 43.9% increase from the $17.1 billion reported during the second quarter. All told, credit unions have originated $56.0 billion worth of first mortgages during the first nine months of 2010. The third quarter volume is the strongest quarterly period of first mortgage originations in more than a year, and even outside of first mortgage originations, third quarter loan activity in 2010 was the highest reported in the past five years.

The increase in originations has consequently fed a growth in the balance sheet. As of September, credit unions reported a 2.2% increase in their first mortgage portfolio. This growth in first mortgages was crucial to the overall success of the real estate portfolio, up 14 basis points over past year. 

Although growth in the first mortgage portfolio may appear to have slowed, part of this is the result of an increased presence in the secondary market. Through September, credit unions have sold $27.6 billion in first mortgages to the secondary market. This is above the six-year average of $20.6 billion and is the second highest year on record for the credit union system. This strong period of secondary market sales represents 49.6% of all first mortgages originated year-to-date.

Opportunities in the real estate market can continue to fuel credit unions' portfolio growth over the next few quarters. Case in point, the Federal Reserve Board’s Senior Loan Officer Opinion Survey shows some banks have once again begun tightening their credit standards after a period of relaxed standards. Less mortgage financing available through the banks in the third quarter of 2010 presents a great opportunity for credit unions to fill unmet demand.