WASHINGTON (11/3/14)--The second quarter of this year saw credit unions crack 10% of total market originations for the first time, according to Inside Mortgage Finance. Mike Schenk, Credit Union National Association vice president of economics and statistics, called those numbers "eye-popping" in Mortgage Banking magazine's October issue.
In a piece written by Robert Stowe England for Mortgage Banking, the author traces credit unions' slow and steady rise in the mortgage origination market.
"The credit union's share of mortgage production, which edged up to 3% in the period from 2003 to 2005, rose to 4% in 2007, then jumped to 6.75% in 2008--where it remained on a plateau between 6% and 7% until 2013, when it rose to 7.47%, according to Inside Mortgage Finance," England wrote.
"The most recent gains in market share for credit unions have come as the overall mortgage industry's origination volume has declined from $2.1 trillion in 2012 to $1.89 trillion in 2013, with forecasts for only $1.1 trillion in 2014."
Historically, credit unions were more likely to refinance mortgages but have gained ground with new products designed to attract more borrowers, particularly the first-time homebuyer.
CUNA's Schenk told England that credit unions are also benefiting from increasing awareness of what the cooperative model can offer consumers.
"Because they're not-for-profit financial cooperatives owned by the depositors, they don't have stockholders demanding a market rate of return on their investment.
"So, what would go to stockholders in the form of a dividends is essentially routed back to the depositors in terms of lower interest rates on loans and higher yields on savings accounts and fewer and lower fees," said Schenk.
England quoted Guy Cecale, president of Inside Mortgage Finance, who said the 2008 financial crisis provided a chance for smaller lenders such as credit unions to get into the market.
Once the crisis straightened out, credit unions saw a surge in depository accounts, with savings accounts rising to $930 billion in 2013, up from $653 billion in 2008.