Credit Unions Step up to the Plate

Non-banks aren’t the only lenders to benefit as more and more bank holding companies withdraw from the mortgage marketplace.  Credit unions are stepping up to the plate to provide mortgage loans appears to be greater than other financial institutions, according to new research from TransUnion.  Credit unions’ share of all mortgage originations has increased from 7% in Q1 2013 to 11% in Q1 2015.

Nonbanks like loanDepot.com and Quicken Loans issued 53 percent of new home loans, edging out traditional banks and credit union and the share of government-insured mortgages coming from these companies has more than tripled since 2010.

“Mortgage originations had declined substantially across the board in the last few years; however, the decline had been less dramatic for credit unions,” said Nidhi Verma, director of research and consulting in TransUnion’s financial services business unit. “In the last year alone, it appears significantly more credit union executives are seeing growth in this area. Credit unions are becoming bigger players in the mortgage loan market, something that may serve them well in the future as the housing market continues to recover.”

While TransUnion data show that credit union mortgage originations decreased 24% between 2012 and 2014, originations have actually increased 35% in the past year (Q1 2014 to Q1 2015). The rest of the market experienced a 48% drop between 2012 and 2014 and only experienced 15% growth in the past year (Q1 2014 to Q1 2015).

TransUnion also found that credit unions experienced 25% growth in non-prime mortgage originations in Q1 2015 while the rest of the industry grew at 4%.

“As the U.S. economy continues to recover, non-prime mortgage originations are growing for both credit unions and the rest of the industry,” said Verma. “Historically, credit unions have seen lower delinquency rates than the rest of the industry, and their focus on membership expansion makes them well-positioned to take advantage of this growth.”

The research was corroborated by a new survey of 90 credit union executives, with nearly six in 10 respondents stating the number of mortgage originations provided to their members has grown over the past two years. The survey and data were released today at TransUnion’s annual credit union seminar in Las Vegas, which includes participants from several leading credit unions located throughout the country.