Southern UCs take the lead in home lending

A CU time Analysis of NCUA data showed that the South emerged in the first quarter as the largest credit union producer of residential real estate loans, eclipsing the West.

Southern credit unions, defined by the Census Bureau as stretching from Texas to Virginia, issued $26.3 billion in first mortgages, home equity lines of credit and other residential real estate loans in the three months ending March 31. That was up 20.5% from a year earlier.

The West, which had led in volume for years, generated $23.5 billion, down 11.8% from a year earlier and below volume for the South.

Creations fell 23.7% to $12.6 billion in the Midwest, while they rose 1.9% to $11 billion in the Northeast.

As is usually the case in winter, mounts fell in all four regions from the fourth to the first quarter.

First mortgages accounted for $58.1 billion, or nearly 80%, of residential loans in the first quarter.

For all lenders, first mortgage lending hit record highs in 2020 and 2021 as interest rates fell to record lows, sparking a refinancing boom. In addition, purchase loans increased with strong demand and rising prices.

This year, the refi boom erupted as mortgage rates hit new highs. For the week ending June 17, the Mortgage Bankers Association reported Wednesday that the rate on a 30-year fixed-rate mortgage was 5.98%, the highest since November 2008 and the biggest increase in a week since 2009.

Joel Kan, associate vice president of economic and industry forecasting at the MBA, said mortgage rates are now almost double what they were a year ago, leading to a 77% decline in refinance volume over the course of of the last 12 months.

“Buying activity was still 10% lower than a year ago as inventory shortages and rising mortgage rates dampen demand,” Kan said. “The average loan size, at just over $420,000, is well below its peak of $460,000 earlier this year and is potentially a sign that home price growth is slowing.”

The MBA forecast on June 10 indicated that total creations would fall by 40% this year and 6% next year.

Creations by area were weighted by the number of branches a credit union had in each state. This quarter’s report has been revised to reflect changes in NCUA data. In the past, reports showed first mortgages, which included a small (but unreported) amount of first business liens. Beginning in the first quarter, the NCUA reported residential and commercial origins separately.

However, residential real estate loan data, including second liens, is available for past and current NCUA reports.

Nationally, credit unions took out $73.3 billion in residential real estate loans in the first quarter, down 3.1% from a year earlier and 11.2% from the previous quarter.

Map of the United States showing that home loans have fallen in most of the country.

The origins by census areas were:

Northeast

New England: $3.5 billion, down 12.8% from the previous year and 9.6% from the previous quarter.

Middle Atlantic: $7.5 billion, up 10.6% from the previous year and down 3.3% from the previous quarter.

Midwest

Center-northeast: $8.5 billion, down 27.7% from the previous year and 25.9% from the previous quarter.

Center North West: $4.1 billion, down 13.5% from the previous year and 18.5% from the previous quarter.

South

South Atlantic: $15.8 billion, up 16.7% from the previous year and down 10.7% from the previous quarter.

Center-southeast: $3.4 billion, up 33% over the previous year and 42% over the previous quarter.

Center-southwest: $6.6 billion, up 20.4% from the previous year and down 8.6% from the previous quarter.

West

Mountain: $7.8 billion, down 8.8% from the prior year and 14% from the previous quarter.

Peaceful: $15.4 billion, down 14.1% from the previous year and 10.5% from the previous quarter.