Record Year for Credit Unions

More borrowers are turning to credit unions to get mortgages, with the industry expecting to set a new record this year for home loan originations.

Mortgages originated by credit unions are expected to top $100 billion in 2012, the most ever for a market segment that has been frequently pushed aside by bigger lenders when it comes to home loans. Through the end of the third quarter, credit unions had originated $89 billion in mortgages, $7 billion more than at the same point in 2011, according to industry sources.

“For us the volumes we’ve been seeing is because of the historically low interest rates, also emphasized by the fact that people are looking at their options in financial institutions,” Katie Miller, vice president of mortgage products for Navy Federal credit union, told industry publication Credit Unions Online. “Credit unions are great because they are a member owned institution, so the member knows that the credit union has their best interest.”

Navy Federal is the nation’s largest credit union, with $50 billion in assets and 4 million members. It tends to be a popular choice for mortgages because it offers its members the option of a no-money down home loan, something that is hard to come by these days.

Small share of market

Although credit unions are seeing higher mortgage demand, their share of the overall mortgage market remains fairly small. The Mortgage Bankers Association forecasts that U.S. mortgage originations will total $1.28 trillion in 2012, an increase of $20 billion over 2011. About two-thirds of that total volume is in mortgage refinancing.

Credit unions tend to take only a small share of the mortgage market, even though their fees are often lower than those of larger banks and their rates can be competitive. Credit union loan officers often boast that they can help a customer with limited credit get a mortgage when the big banks would turn them down, because they are more familiar with local real estate markets and economic conditions, and may have more flexible underwriting guidelines.

First published at: http://www.mortgageloan.com/record-year-credit-unions-9320