TheMReport — News and strategies for the evolving mortgage marketplace.
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38 | TH E M R EP O RT O R I G I NAT I O N S E R V I C I N G A NA LY T I C S S E C O N DA R Y M A R K E T ORIGINATION THE LATEST A Larger Share of the Pie Credit Union Loan Balances Hit Record High A spike in first mort- gages, along with increases in new and used auto loans, helped push credit union loan balances up to a record high in the second quarter, according to Q2 data from Callahan & Associates. Those three categories accounted for 81.6 percent of loan growth at credit unions last year, according to Callahan & Associates' analysis. In Q2 2016, a 10.7 percent over-the-year increase resulted in credit union loan balances topping $834.3 billion. The previous all-time high was $809 billion set in the first quarter of 2016. The analysis included 5,959 credit unions which reported second quarter data. In Q2, first mortgages accounted for 37.6 percent of total loan growth at credit unions after a spike of 9.8 percent over-the-year. The substantial increase resulted in an aggregate loan balance of more than $340.7 billion in first mortgage loans for credit unions, the highest balance ever reported for any one quarter. "What this tells us about the industry is that credit unions are continuing to find success by appealing to and working with their members, to provide them with the financial solutions they need," Callahan & Associates' Director of Industry Analysis Sam Taft said. "The credit union industry has had a lot of success over the past few years expanding its presence in the first mortgage market; credit union market share has risen from 5.7 percent in June 2011 to 7.3 percent in June 2016. I believe as awareness builds, consumers are increasingly seeing the benefits of banking with credit unions. Related to this, thinking in terms of the broader market, the fact that credit unions have been able to increase their piece of the pie shows that there is both opportunity and demand in the market for financing that isn't being filled by the large banks and mortgage finance companies." Originations were a heavy contributor to that increase, totaling $62.6 billion for the first half of 2016—an increase of 1.7 percent from the first half of 2015 and the highest aggregate amount loaned for the first half of any year since 2013, according to Callahan & Associates. Building Up the Cash Stash Saving is tough, but millennials are doing it M illennials have been cited by many economists and analysts as the key demographic for raising the homeownership rate in the U.S., which is near a five-decade low. While saving for a down payment remains a significant ob - stacle for millennials who hope to achieve homeownership, a recent survey indicates they are sav- ing. TD Bank's second annual First-Time Home Buyer Pulse found that out of more than 1,000 Americans who want to purchase a home in the next five years, nearly two-thirds are saving cash to buy their first home. "It's encouraging to see mil - lennials thoughtfully prepare to enter the housing market," said Scott Haymore, Head of Pricing and Secondary Markets at TD Bank. "With today's afford - ability programs, owning a home doesn't have to be a dream, it can be a reality." Sixty-five percent of those surveyed said that the down payment is the biggest barrier to buying a home, but at the same time, would-be first-time buyers have that covered. Nearly one-fifth of them plan to supplement their down payment savings with financial assistance from friends and/or family, and 65 percent of them plan to use a spouse or a partner as a co-signer. More than one-third of those surveyed plan to put less than 20 percent down on a home (for millennials, that percentage rises to 35 percent) and 37 percent of first-time buyers indicated that they plan to take advantage of mortgage affordabil - ity programs. "For many consumers, a 20 percent down payment is a major barrier to homeownership," Haymore said. "It's often difficult to save this much cash, especially for young adults saddled with substantial student loan debt. First-time buyers are shopping for low-down payment mortgage programs, which allow buyers to put as little as 3 percent down." Millennials surveyed reported that their top three priorities before purchasing a home are sav - ing for a down payment, paying off debt, and having a steady job. Those millennials that do have mortgages indicated that they want to pay them off quickly, with one-third of them stating the play to pay off their loan over a 15-year period. "It's encouraging to see millennials thoughtfully prepare to enter the housing market." —Scott Haymore, TD Bank