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Happy New Year! We kick off 2016 with a look at lending. Will balances continue to grow? Which kinds of loans have the best upside? And what roles might interest rates, new providers and the economy play?
According to Callahan & Associates, federally insured U.S. credit unions are coming off 10.7 percent year-over-year third quarter growth in total loan balances, ending at a record $778.7 billion. Driving the increase were new autos at 17.6 percent, used cars at 13, and first mortgages at 10 percent.
Gas prices have stabilized and the National Automobile Dealers Association is looking for even higher new car sales this year, before “leveling off ‘gently’ in 2017”. And sources in our cover story indicate mortgage lending opportunities related to pent-up demand exist among Millennials and those burned by, but recovering from, the housing market bust.
The long-anticipated interest rate hike finally came on Dec. 14, and students of economic cycles disturbingly remind that the next U.S. recession could already be on its way, as early as Q4 2016, notes CUES member Bill Vogeney, senior EVP/lending and finance for $4.1 billion Ent Credit Union, Colorado Springs, Colo.
Additionally, housing prices are rising faster than many members can afford in parts of Canada and the U.S. Many San Franciscans, for example, pay more than the average mortgage payment in rent, but can’t buy a home because they aren’t able to save the 20 percent down for a conventional mortgage. Recognizing this point of pain, $975 million San Francisco Federal Credit Union just created the Proud Ownership Purchase Program for You, or POPPYLOAN™.
Members can finance up to 100 percent, up to $2 million, to purchase a home anywhere in the nine Bay Area counties, with no private mortgage insurance. The loan is structured as a 5/5 adjustable-rate, 30-year mortgage, meaning rates are fixed for the first five years and every five years thereafter, with no more than a 2 percent increase every five years and no more than a 6 percent increase over the life of the loan.
“We see POPPYLOAN as a game-changer for the San Francisco real estate market,” said CUES member Rebecca Reynolds Lytle, SVP/chief lending officer, in a press release announcing the new offering. “We created POPPYLOAN to help middle class families realize their dream of buying a home without having to move out of the Bay Area.”
Mary Auestad Arnold
Editor and Publisher
