The Mortgage Market Remains Strong for Credit Unions

Mortgage lending continues to be an area of credit union growth. In the first quarter, new information on interest-only mortgages and delinquencies show credit unions safely expanding their first mortgage product line.

 
 

The mortgage market overall is signaling mixed results. The Mortgage Bankers Association reports total mortgage originations for the first quarter stood at $653 billion, up from $626 billion during the same period in 2006. While this seems positive, the outlook for the remainder of the year is not as strong. Forecasts for 2007 are $1.93 trillion in originations, down from $2.19 trillion in 2006. How did credit unions fare in the mortgage market’s first quarter?

Originations on the Rise

As of March 31, 2007, mortgage originations reported an increase for third consecutive year. March 2004 originations were $11.7 billion, compared with $12.1 billion in 2007’s first quarter.

Real estate loans held in the credit unions’ books increased 1.3% over the past quarter to $253.8 billion. Bank real estate loans decreased 0.3% to $2.2 trillion in the same timeframe.

Interest-Only Mortgages

New data reported on the March 31 5300 Call Report included was information on interest-only and optional payment loans. These mortgage products have been in the news along with the recent sub-prime mortgage market problems. For the 358 credit unions offering these loans, balances stood at $4.8 billion as of March 31, 2007.

The top five providers of interest-only mortgages are as follows:

 Rank

 St

Credit Union

 I/O Mortgages Outstanding

 1st Mort. Outstanding

 Assets

1

VA

Navy

616,908,396

6,005,808,339

28,718,027,149

2

CA

Kinecta

517,468,034

1,566,689,578

3,768,237,370

3

TX

Texans

348,574,295

761,123,487

1,955,287,828

4

CA

North Island

279,130,660

442,835,833

1,529,160,268

5

CA

Provident

251,029,134

786,073,382

1,499,689,895


Delinquencies in the First Quarter

Reportable delinquencies for these interest-only mortgages were 0.34%. All first mortgage delinquencies stood at 0.33%, down from 0.35% at 2006 year end. Credit unions continue to maintain high quality loans in all mortgage products.

The data above suggests that credit unions show will continue to expand their mortgage lending activity. Credit union opportunities should continue to grow during the next 12 months as more than $1 trillion of ARM mortgages will be resetting – many at much higher rates.

 

 

 

June 11, 2007


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