Two Thoughts for 2006

2006 will be a great year for credit unions to forge relationships with home buyers. How can you ensure your credit union is successful?


What’s ahead in 2006 for those of us who finance homes for members? Two things for certain.

First, 2006 will be another great year for mortgage lending. Yes, mortgage rates will be higher in 2006, at least according to industry experts. Recent predictions tell us that the average cost of a 30-year rate loan will be about 6.50 percent. This 60 basis point increase over 2005’s average isn’t expected to have much of an impact on the size of the overall market. Total mortgage financing in 2006 will be roughly equivalent to 2005’s $2.78 trillion.

Be prepared, though, members will be buying more homes than refinancing their existing residences. More than 65 percent of next year’s financing activity will be for the purchase of a home. That’s up 12 percent over last year. What to do? Two things:

  • Make sure your credit union is the fastest, most convenient home lender in your market.
  • Purchase! Money transactions go to those that can execute most quickly, with a minimum of friction.
    You’ll also want to fortify your loan product offering. Home price appreciation will slow in 2006, yet affordability remains an issue. Make sure your credit union is offering loan products that meet the needs of all members, from first-time home-buyers to jumbo purchasers.
    Second, it’s time to embrace affordable lending, and take an active role in your communities. Housing everywhere is becoming increasingly expensive, seemingly out of the reach of many credit union members. Yet that needn’t be the case.
    Curious about what your credit union can do to make a difference?

Two suggestions:

  • Financing Options. Both Fannie Mae and Freddie Mac offer affordable lending programs. Is your credit union taking advantage of Fannie Mae’s MyCommunity™ program? Freddie Mac’s Home Possible(SM) offering? If not, resolve to do so now, it’s early enough in the year that resolutions still count.

    Secondary market products like these two are important affordable financing tools. Your portfolio can be, too. CUNA & Affiliate’s HLPR Loan Program is another important affordable initiative. Consider this another option to help members achieve the dream of homeownership.
  • Community Involvement. Every community has an organization or organizations that support the development of affordable housing. I’ll hazard a guess that many of these groups would be more than willing to work with a lender whose mission is similar to their own – in other words, your credit union. Affordable financing goes hand-in-hand with affordable housing. Seek them out, learn how your credit union can be most helpful, and work together to build affordable options in your community.

One final thought for 2006: Let’s make it a great year! Members have abundant home financing options. Let’s make sure they know that their best choice is their credit union.



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Jan. 16, 2006



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