Credit Unions Want Your Buyers’ Business

Credit unions are aggressively expanding their mortgage business by more than quadrupling their share of total mortgage market volume in the last nine years, according to the National Association of Federal Credit Unions.

Read more: $1B in Mortgages Milestone for Navy Federal

Navy Federal, the nation’s largest credit union, closed more than $1 billion in mortgages for home purchases during March, its best month ever. More than half – 59 percent – of the loans it issued went to first-time buyers too. Navy Federal is available to all branches of the armed services, active and retired, civilian employees, contractors, and relatives.

Navy Federal is hooking first-time buyers at a time when first-time home buyers’ presence on the overall market has been near 30-year lows, according to the National Association of REALTORS®. Historically, first-time buyers make up about 40 percent of the housing market, but currently is at just 28 percent to 29 percent.

Navy Federal is offering a range of products that cater to first-time buyers, particularly those who are struggling to save for the down payment. For example, Navy Federal is offering loans with zero-down payments, no private mortgage insurance premiums, as well as the standard low-down payment products of the Federal Housing Administration with a 3.5 percent minimum and the Department of Veterans Affairs with a zero minimum on loans.

Other credit unions are offering similar programs too in expanding their mortgage business. For example, North Carolina’s State Employees’ Credit Union is offering qualified members up to 100 percent financing on mortgages up to $400,000 with no private mortgage insurance premium payments. The program also offers up to $2,000 in closing cost aid. The interest rate charged on the loans was 4.25 percent in mid-April for a 30-year term that has a rate adjustable after five years. 

Some credit unions are even offering to refund portions of a real estate agents’ commissions. For example, the Boeing Employees’ Credit Union – open to all residents and workers in the state of Washington, not just exclusive to Boeing employees – offers home buyers the option to receive a 20 percent cash refund of their real estate agent’s commission as well as a $250 credit toward mortgage closing costs.

Credit union officials say they aren’t worried that these loan products will make them vulnerable to losses if home owners default on their loans.

“We know our members,” says Katie Miller, vice president for mortgages at Navy Federal. Navy Federal’s serious delinquency rate on its entire portfolio was 0.57 percent in March.

Source: “Many Credit Unions Offer Tempting Mortgage Deals,” Los Angeles Times (April 19, 2015)