More Borrowers Are Turning to Credit Unions for Loans
More Borrowers Are Turning to Credit Unions for Loans
Credit union membership and lending is growing as borrowers increasingly turn to them for mortgages. Between the end of 2019 and September 2020, credit union membership increased by 3.37 million, or 2.8%. Credit union membership now totals 125.11 million, CNBC reports. Further, loan portfolios at credit unions grew 6.6% over the last year, and these banks saw a nearly 5% boost in loans.
Affinity, a New Jersey-based credit union with 20 branches, reported record-high growth in mortgage originations in the last year. Low interest rates and a surge in home buying drove the uptick. But “we saw growth on the lending side and on the deposits side, which is counterintuitive amid the crisis and hardship,” Jacquelyn Kearns, chief brand officer at Affinity, told CNBC.
Credit unions are not-for-profit entities that tend to return earnings to members through lower loan rates than commercial banks. Borrowers also may seek more of a personal relationship with their lender, which credit unions promote.
Under times of economic uncertainty, credit unions tend to grow more popular. “During periods of risk and uncertainty, banks tend to pull back a lot more on lending and just get a lot more conservative,” Jordan van Rijn, senior economist for the Credit Union National Association, told CNBC. “But credit unions, as part of their mission, continue to serve the members.”
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.
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