What to expect in 2011
Vogeney admits he’s concerned about what 2011 will bring on the lending front. He doesn’t think there will be much more demand for mortgage refinancings, and predicts consumer loan growth will hover around 5% to 6%.
“The mortgage environment is as unpredictable as I’ve ever seen it,” Vogeney says. Ent Federal budgeted for a $150 million decline in its first mortgage portfolio and a 30 basis point reduction in its 2011 net interest margin.
“Instead of making and holding mortgages at 4.5%, we may have to sell them and reinvest the money at 1%,” he says. “We can’t make enough consumer loans to eat up that $150 million decline. That’s our big challenge.”
On the bright side, Vogeney believes there will be an uptick in new- and used-auto loans in 2011 due to pent-up consumer demand and a slowly improving job outlook.
And he sees “tremendous potential” for unsecured personal loans and credit cards due to large issuers’ recent losses and new Credit Card Accountability, Responsibility, and Disclosure (CARD) Act requirements.
“Credit card issuers will be more selective in their low-rate pricing offers,” he says. “There’s a tremendous opportunity for credit unions to get back in that business or offer a personal line of credit with reasonable rates, terms, and fees.”
Above all, credit unions must remember one thing: There’s no crying in lending.
“Don’t bemoan the fact that the economy isn’t good and people are paying off debt and not taking on new loans,” Vogeney advises. “Look at the bright side: We have historically low interest rates, and members are refinancing everything they can. If credit unions aren’t reaching out to members and trying to earn and keep that business, they’ll continue to have problems.”