10/30/2023 0 Comments Ncua equal housing lenderNotably, outstanding junior liens in the credit union industry grew about 34 percent over the last four quarters. Still, over the last few years, credit unions have actively originated first and second liens, including home equity lines of credit. Ultimately, all of this economic churn signals that credit unions must carefully manage their credit risks going forward and consider early intervention to prevent a delinquency from becoming a charge-off or foreclosure." "The reinstatement of federal student loan repayments and rising costs for property and casualty insurance will presumably have an impact on these already strained household finances, and it seems more likely than not that credit union delinquency and charge offs will continue to rise. ![]() And, the inventory of homes available for sale remains very low, as many potential sellers choose not to sell because that could mean much larger mortgage payments for them in the future in moving to a larger, more costly home. On the demand side, home affordability has fallen dramatically during the last few years, with many potential borrowers remaining on the sidelines because they simply can’t afford to buy property. Simultaneously, higher mortgage rates are sharply impacting both the supply and demand sides of the housing market. That’s positive news, and it provides protection for mortgage lenders like you should market economics shift in the short term. The NCUA estimates that between 90 and 95 percent of credit union mortgage borrowers have 20 percent or more equity in their homes. Compared to prior business cycles, especially the 2008 financial crisis, home equity levels also remain quite high, in large part because home values have remained resilient. Mortgage delinquency rates, although rising, additionally remain at relatively low levels. The good news is that, despite inflation and higher interest rates, mortgage performance has stayed relatively solid. If you’re at this conference, you already know that today’s housing market is complicated. These challenges and how they impact credit union performance, and the regulatory environment are the focus of my remarks today. Nevertheless, today we continue to see several hurdles affecting the American consumer’s ability to purchase a home, maintain a balanced household budget and gain fair and equal access to credit. While this market share is small when compared to that of banks and non-bank lenders, credit unions play an important role in fostering home ownership in communities nationwide, especially in rural or underserved areas and communities often overlooked by traditional financial institutions. Today, credit unions hold about 5 percent of all outstanding mortgage debt in the U.S., including a large and growing percentage of second mortgages. In just a few decades, we have seen the credit union system’s presence in the mortgage market grow significantly. Home ownership builds intergenerational wealth and contributes to strong and vibrant communities. And, thank you, Peter, for the kind introduction as well as to the American Credit Union Mortgage Association for inviting me.Īll of us here understand that owning a home is a fundamental component of the American Dream. As Prepared for Delivery on October 4, 2023
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