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Why Credit Unions Show Huge Mortgage Growth

Why Credit Unions Show Huge Mortgage GrowthIt’s a great time to be a credit union. The latest figures from the CUNA Mutual Group, an industry trade association, show that loan balances at the nation’s 6,000+ credit unions have grown by 10.4 percent during the past year. Most remarkably, the association reports that credit union first-mortgage originations “are on pace to reach record levels in 2015,” up an estimated 46 percent over 2014.

Why is it that credit unions are doing so well?

In basic terms, a credit union is a member-owned, not-for-profit, financial co-operative. The goal is not to maximize profits but to make financial products and services available to members at the lowest possible cost. As a member you get to vote on how the credit union is run, regardless of how much you have on deposit or have borrowed.

“Like banks,” says the National Credit Union Administration, an independent federal regulator, “credit unions accept deposits, make loans, and provide a wide array of other financial services. But as member-owned institutions, credit unions focus on providing a safe place to save and borrow at reasonable rates. Unlike banks, credit unions return surplus income to their members in the form of dividends.”

Why Credit Unions

All of this is very nice but the real question is why has credit union activity taken off?

One answer is that in many cases banks are offering fewer mortgage products and credit unions – along with other nonbanks – are stepping into the breach. Credit unions are inspected to originate first mortgages worth $137 billion vs. $94 billion in 2014. Moreover, credit unions now originate 8.5 percent of all first mortgages, a huge increase from the 4.4 percent market share they had in 2010.


A second answer is that by their nature credit unions very much resemble small community banks in the sense that they tend to be localized. As an example, you might have a credit union for local teachers or government workers.

While localization is one attraction, not all credit unions are especially local but they’re attractive anyway because they serve members with a common set of experiences. For instance, Navy Federal, the nation’s largest credit union with 5.9 million members and more than $71 billion in assets, is open to those with military service and their families.

Third, just like bank accounts, money placed in credit unions is insured. The National Credit Union Share Insurance Fund (NCUSIF) provides up to $250,000 in coverage per individual depositor. In addition to mortgages, members can open checking and savings accounts, use ATMs, and get car loans and student loans, among other services.

“Deposits at all federal credit unions and the vast majority of state-chartered credit unions are covered by NCUSIF protection,” says the NCUA, “and not one penny of insured savings has ever been lost by a member of a federally insured credit union.”

Lastly, credit unions simply have a good reputation, they’re not associated with the financial meltdown or toxic mortgages.

Will credit unions continue to grow? As more and more people discover that credit union profits go back to members the answer will surely be yes.

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