Best 1Q Ever For Loan Originations

Credit unions originated their highest loan volume for first quarters, helping members take advantage of historically low interest rates.

Considering that the first quarter of the year is historically a slower quarter for loan originations, credit unions are already setting themselves up for a record year.

Loan originations at the 7,035 credit unions currently reporting data in Callahan & Associates’ FirstLook program are at the highest volume recorded in the first quarter. FirstLookdata currently incorporates 99% of the industry. Originations during the first three months of 2012 totaled $72.o billion, up 25.3% over the same time period last year. This year-over-year growth is significantly higher than the 13.3% in 2011.

Quarterly Loan Originations
For 7,035 FirstLook Credit Unions
Source:Callahan & Associates’ FirstLook.

First mortgage and consumer loans helped fuel the strong growth in originations. First mortgage originations totaled $26.0 billion through March 31, and they experienced a 47.1% dollar increase from the $17.7 billion lent in the first three months of last year. Due to historically low rates for first mortgages, these record-breaking originations are allowingmembers to save hundreds of millions in interest rate costs over the life of the loans.

First mortgages comprised about 36.1% of all originations. Only 30.7% of originations were first mortgages in the first three months of 2011. First mortgages as a percent of originations variedfrom state to state, with Arkansas noting only 14.4% of their originations in the first mortgage category, while Vermont reporting just more than 71.0%.

A total of 160,746 first mortgage loans were granted in the first three months of 2012, versus 112,898 in the same time period last year, a 42.3% increase. The average loan balance rose to $161,549 in the first quarter of 2012, up from $156,390 the samequarter last year.

Of the first mortgages, $13.4 billion, or 51.6%, were sold to the secondary market for balance sheet management. Because of this and due to members refinancing their loans at verylow rates and making mortgage prepayments first mortgages on the balance sheet increased by 4.1%.

Fixed-rate first mortgages with a term greater than 15 years were the most common type of first mortgage, making up 46.6% of the total fixed-rate loans in 1Q 2012. Fixed-rates with lessthan 15 years made up most of the remaining loans, accounting for 34.7% of the $26 billion originated.

The consumer loans segment, including credit cards, new and used auto loans, and student loans,also had significant growth. Consumer loan originations rose 16.6% to $39.0 billion but declined as a percent of total originations to 54.1% in 1Q 2012 from 57.9% 1Q 2011.

First Quarter Originations By Type
For 7,035 FirstLook Credit Unions
Source: Callahan & Associates’ FirstLook.

The record-breaking originations in the first quarter resulted in total loan balances outstanding at these 7,035 credit unions in an increase 2.7%, a positive reversal from the 0.9%decrease they reported last year.

May 14, 2014

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