Lending from credit unions is growing as borrowers seek out more options to finance their home purchases.
Between the end of 2019 and September 2020, membership of credit unions increased by 2.8%, or 3.37 million, and total membership now totals 125.11 million, according to a report by CNCB. Moreover, credit unions’ loan portfolios have grown by 6.6% over the last year, seeing an overall 5% increase in total loans over that period.
Credit unions are nonprofit entities that seek to return their earnings to members via lower loan rates than commercial banks. They also try to provide a more personal relationship to borrowers.
Affinity, a credit union with 20 branches in the New Jersey area, reported record-high growth in mortgage originations in 2020. It said the low interest rates and a surge in home buying are the main factors responsible for this. However, Affinity’s chief brand officer Jacquelyn Kearns said it also “saw growth on the lending side and on the deposits side, which is counter-intuitive amid the crisis and hardship”.
CNBC said that in times of economic uncertainty it’s not uncommon to see credit unions enjoy a boost in popularity. Jordan van Rijn, senior economist for the Credit Union National Association, told CNBC that banks tend to be cautious and pull back on lending. “But credit unions, as part of their mission, continue to serve the members,” he said.
Despite the pandemic, credit union asset quality improved over the past year. The delinquency rate dropped to 0.54% in September, according to the Credit Union National Association.