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The post Cost Pressures Are Changing Member Behavior appeared first on CreditUnions.com.

Top-Level Takeaways

• A new approach to mortgages at 7 17 Credit Union includes no fees, low rates, and refinance incentives.
• Data and regional challenges shaped the strategy, with programs addressing specific community needs rather than broad national trends.
• Partnering with employers and targeting underserved urban markets helped 7 17 make the connection between stable homeownership, employee wellbeing, and long-term community growth.

The national conversation about housing affordability tends to focus on inventory, home prices, and mortgage rates. But for many would‑be buyers, the upfront costs that make a mortgage possible in the first place present an insurmountable hurdle to homeownership.

At 7 17 Credit Union ($2B, Warren, OH), addressing affordability started with questioning whether many traditional mortgage costs needed to exist at all. In response to feedback from some of its workplace partners, the cooperative launched a series of mortgage-related initiatives in 2025 aimed at supporting broader regional housing needs, including zero-fee home financing and refinancing and rate reductions. But rather than simply introducing a competitive cost structure, the new approach underscores how a credit union approach can look fundamentally different.

“It’s not enough just to talk about the difference between credit unions and banks,” says John Demmler, CEO of 7 17 Credit Union. “We wanted to create a suite of products that give clear examples of the differences. We started with the idea of housing affordability because that was a major issue in our region.”

A Mismatch In The Market

The need for more affordable housing emerged against a backdrop of broader economic pressures shaping Northeast Ohio. Demmler says household incomes in many communities the credit union serves lag state averages, leaving families particularly vulnerable to inflation, higher energy costs, and other rising expenses. At the same time, many local housing markets face aging inventory and limited availability.

The Eastgate Council of Regional Governments commissioned a housing study conducted by the Greater Ohio Policy Center to better understand housing needs in Mahoning and Trumbull counties. The study identified two significant trends.

First, demand was concentrated around one- and two-bedroom units, whereas excess capacity existed in four-bedroom homes, reflecting a shift in demographics toward smaller household sizes. Researchers also identified substantial need for housing in the $500 to $1,000 per month range, aligning with what households earning approximately $25,000 to $35,000 annually could reasonably afford.

The findings revealed another notable tension — families were increasingly seeking homes in the $300,000 to $500,000 range with access to safe neighborhoods, quality schools, and newer housing stock.

“There’s a need for attainable housing, but there’s also a need for quality housing,” Demmler says.

The housing study reinforced what 7 17 had already discovered through conversations with employers and community partners and hinted that its previous investments might not go as far as planned.

“We had made a $100 million commitment to affordable housing starting around November 2024,” Demmler says. “We thought that commitment would carry through 2030. I think we’ll blow through that $100 million several years before 2030.”

“Your Keys, No Fees”

The need for affordable housing isn’t just a family issue; it shows up in the workplace, too. Demmler says employers are starting to connect a stable home life with workforce performance, turning housing affordability into an employee financial wellbeing issue.

“Owners want employees with a financially secure home life,” he says. “When they’re not worried and stressed, they’re more productive at work.”

Armed with this understanding, the credit union considered how it could meaningfully address regional housing needs, household budgets, and homeownership barriers. The answer was a mortgage with no out-of-pocket closing costs, available exclusively to workplace partner employees.

7 17 launched “Your Keys, No Fees,” roughly a year ago. Although eliminating many traditional mortgage fees sounds counterintuitive to ensuring sustainability and long-term financial health, the math tells a different story.

“We earn all of the fees back in about three months through normal interest income,” he says. “If we’re holding a mortgage for 10 years, it’s not too much to ask to give up three months of interest income to break down barriers to homeownership.”

The CEO takes the argument a step further.

“I would challenge every bank, every mortgage company, every financial institution to realize they don’t need to charge these fees either,” Demmler says. “If anyone is getting a mortgage, they should demand they pay zero closing costs, because it’s not needed.”

A Broader Play On Affordability

Interest spread quickly, bringing new energy to the cooperative’s SEG program and allowing it to recruit larger workplace partners.

“Our average workplace partner has maybe 75 employees,” Demmler says. “But recently we’ve brought on some really large ones: Akron Children’s Hospital, Stark State College, Youngstown State University, and Kent State University.”

And, today, 7 17 has expanded its strategy beyond eliminating fees.

“In Northeast Ohio, a lot of urban markets were supported by industries that don’t exist today,” Demmler says. “These cities have been hollowed out over several decades, but we know cities represent the lifeblood of the region. We wanted to do something to strengthen our cities.”

The cooperative expanded its housing initiative, offering a 1% reduction on qualifying mortgage rates to borrowers purchasing homes within the city limits of Warren, Youngstown, Canton, or Akron.

It also expanded into refis to give families more room in their household budgets.

“Mortgage rates went from below 3% to closer to 7%,” Demmler says. “If you bought anytime from 2022 to today, that’s a more challenging monthly payment.”

Homeowners refinancing with 7 17 today can take advantage of a 1% reduction from their existing mortgage rate, down to a floor of 4.99%.

“And we’re not going to charge you a nickel to do it,” the CEO adds.

For Demmler, these offerings are less about growing mortgage volume and more about changing expectations.

“If we can make every bank in Ohio stop charging fees to get a mortgage, then that would be an incredible accomplishment,” he says.

A Holistic Approach

Housing affordability served as 7 17’s starting point, but Demmler says the credit union never intended the strategy to operate in isolation. Instead, it became part of a broader “Ohio Strong” campaign, which includes products that help members navigate household pressures, from auto expenses to savings behaviors. The common thread is less about individual products and more about designing solutions around the financial realities members face every day.

“It’s not enough to have one gimmick product out there,” Demmler says. “You have to look at the whole need of your membership and make sure what you’re offering is relevant and meaningful.”

That philosophy influences how the cooperative thinks about success. Traditional metrics such as loan growth and membership expansion still matter, but Demmler says the credit union’s larger objective is to create products that change the conversation about what financial institutions should provide.

“When the products and services that we put out fundamentally change the expectations of what people want out of banking and moves the needle for other financial institutions to offer better products, then we know we’ve had meaningful change,” the CEO says.

Ultimately, 7 17 built this mortgage initiative to solve a public need first and allow business growth to follow. For credit unions considering similar efforts, Demmler suggests starting somewhere other than product design.

“Seek out first the public need that you’re trying to address,” he says. “Seek that first, and all the rest is stumbled on.”

Member engagement begins with employee empowerment. When employees feel financially secure at home, they show up differently at work — and credit unions like 7 17 are building products designed around that reality. The Member Engagement & Financial Wellbeing Consortium helps credit unions activate the internal shift that turns mission-aligned strategy into measurable member outcomes. Learn more.

The post Keep The Mortgage. Ditch The Fees. appeared first on CreditUnions.com.

HELOC BALANCES AND UTILIZATION
FOR U.S. CREDIT UNIONS
SOURCE: CALLAHAN & ASSOCIATES

Home equity loans and lines of credit were key drivers of credit union growth in the first quarter of 2026, according to remarks in Callahan & Associates’ latest Trendwatch webinar, and credit unions are taking different approaches to capture that demand.

Eras And Roots

Baton Rouge Telco Federal Credit Union ($456.4M, Baton Rouge, LA) has reported a 20% lift in home equity lending in the past several years. The southern credit union offers only HELOCs and does not provide closed-end home equity lending.

Although the demand has been steady, HELOC requests have by no means exploded, says Katie Guylette, the credit union’s chief lending officer. That’s partly by design.

The credit union focuses on auto lending — indirect auto makes up the majority of its loan portfolio — and promotes its home options twice a year. It runs a purchase campaign in the first half of the year and a HELOC campaign in the second half.

Telco used to combine its purchase and HELOC campaigns but found those member segments’ needs were different enough to require independent, tailored outreach.

“We’ve developed a strategy of trying to get much more specific and targeted with our messaging,” says Kristin Romero, chief experience officer.

The credit union is still crafting this year’s HELOC campaign, but it typically focuses on digital channels to raise awareness with existing members. It’s also got a wildly successful past campaign to draw on.

In 2024, Telco leaned into the cultural phenomenon of Taylor Swift’s Eras Tour to promote HELOC opportunities. That campaign proved to be the credit union’s most successful ever, Romero says, crediting a mix of smart timing and a more playful tone.

The credit union’s 2026 mortgage campaign highlights strong roots and smart financing, and the HELOC campaign is likely to take its cues from that, possibly with a “grow your roots” theme, Romero says.

“You’ve planted roots, now leverage that so you can achieve your dreams, that kind of thing,” she says.

Regardless of the campaign, one of Telco’s biggest lessons has simply been to offer a straight-forward product and communicate the benefits to members.

“Because we’re a bit smaller, members can feel like they’re getting that personal service and handholding with something that can be stressful,” Romero says.

Same Product, New Messaging

Home equity lending at TAPCO Credit Union ($719.3M, Fircrest, WA) has increased in the past 18 months, with demand shifting from open-ended HELOCs to termed home equity loans.

The credit union processes roughly an equal number of both, but HELOC borrowers typically access only $300,000 or so of available equity, compared with roughly $3 million issued at once in closed-end home equity loans, says Jeremy Mandery, chief retail and lending officer.

In the past, edgy campaigns like its 2022 “Big Deck Envy” helped TAPCO attract local attention, borrower business, and industry recognition, but as the economy has shifted and consumer sentiment has fallen, the credit union has altered its tone to focus more on community.

TAPCO is delivering much of its latest messaging through online banking and other digital channels, which tend to provide more consistent exposure to members than a one-off promotional email, says Jacob Rose, director of marketing.

The lending team has also worked with title companies and other vendors to identify direct mail prospects who have equity in their homes and live in the vicinity of a TAPCO branch. The credit union then sends a postcard with a scannable QR code that provides information.

The toned-down messaging and focus on community is also the result of a stronger market presence. Back when it launched Big Deck, it was trying to attract attention.

“People see us now,” Rose says. “The community sees us. We don’t need to be as splashy with some of that marketing.”

Mandery also credits CEO Justin Martin with shifting TAPCO’s overall approach.

“Over the past four years, we’ve had 25% asset growth and we’ve gotten back to the roots of what credit unions do,” Mandery says. “We are certainly outspent by some credit unions and regional banks in our area, but when it comes to boots on the ground, we’re there. That puts us in the room for opportunities we wouldn’t otherwise get.”

Visions Of Success

Across the country, demand for home equity products at Visions Federal Credit Union ($5.3B, Endwell, NY) has been high for the past few years but was flat in the early months of 2026. According to the credit union, seasonality is at play, and it is taking steps to boost interest.

“The demand is out there, but it’s been a sleepy start to the year,” says Mandy DeHate, chief marketing officer. “We’re starting to get more to our stride in terms of applications.”

Visions offers closed-end home equity loans and open-ended lines of credit, although DeHate says the latter tends to be more popular. To promote its products, the northeastern credit union has embraced digital marketing in a year filled with major sporting events. Over the top — or OTT, for short — ads served direct to audiences over the internet are helping the credit union capture eyeballs during high-profile sporting events like the Super Bowl, March Madness, the Winter Olympics, and this year’s FIFA World Cup. That effort works alongside Google Performance Max campaigns to increase Visions visibility across the broader Google network.

“We’ll get [consumers] while they’re searching, we’ll get them while they’re watching YouTube, we’ll get them as they’re going about their day,” DeHate says. “Those multiple touchpoints drive home the fact we’ve got this product, and I think it leads to faster decision-making and stronger credibility of our brand.”

That same approach extends to audience targeting. The credit union is running Spanish-language digital campaigns tailored to its Hispanic communities and ran a successful geofencing campaign in 2025 to target members visiting retailers like Lowe’s and Home Depot located near one of Visions’ 61 branches. That campaign drove branch traffic, DeHate says, but it tracked visits rather than whether members ultimately opened a HELOC or completed another transaction.

Ultimately, although these efforts can attract new members, most HELOC applications at Visions still come from existing members — underscoring the importance of staying visible across channels and meeting members where they already are.

See how your home lending performance compares. Demand for home equity products is rising industrywide, but how does your credit union stack up against true peers? Peer Suite gives leaders instant access to 20 years of industry data, peer benchmarks, and goal-aligned performance analysis. Start your free 30-day trial of Peer Suite.

The post 3 Ways To Market For HELOC Success appeared first on CreditUnions.com.

Homeownership is a key component of the American dream; it’s also part of the credit union dream. If a member holds a mortgage or home equity loan with the credit union, odds are they’ve got other products there as well. It’s one step closer to being their primary financial institution. Although not all credit unions offer mortgages, home loans of all kinds remain a notable driver of industry growth.

This week is all mortgages on CreditUnions.com. In the days to come, keep your eyes peeled for:

• Three ways credit union marketers at TAPCO Credit Union, Baton Rouge Telco FCU, and Visions FCU are making the most of growth in the home equity market. Read more in “3 Ways To Market For HELOC Success.”
• How a rethink of closing costs, rate relief, and employer partnerships helped 7 17 Credit Union build an affordable housing mortgage program that works. Read more in “Keep The Mortgage. Ditch The Fees.”
• Two takes from TAPCO Credit Union and Appalachian Community FCU on how the two cooperatives are looking to manufactured housing to bring affordable housing to younger borrowers, rural borrowers, low-income communities, and more. Read more in “Small House, Big Opportunity.”
• New insights into the industry’s mortgage performance as of the first quarter of 2026. Read more in “Mortgage Lending Is Back, But It Looks Different.”
• Plus, exclusive client content that digs into the nuanced mortgage opportunity taking shape around first-time buyers, shifting rate dynamics, and emerging risk signals. Read more in “Mortgage Lending Rebounds With New Borrowers And New Risks.”

Now it’s your turn. What’s driving mortgage growth for your credit union? Or, if you’re pulling back, why? We want to hear how your shop is approaching the home loan market. Drop us a line, and we might feature your story on CreditUnions.com.

The post Home Is Where The Heart (And More) Is appeared first on CreditUnions.com.

Manufactured homes are gaining ground as an option for affordable housing. Although prices have risen in recent years, so, too, has the quality of manufactured homes. Despite lingering stereotypes, some credit unions consider manufactured housing a solid fit for specific borrowers and markets.

“We’re in a rural area, and it’s a good niche product for us,” says Vicki Gobble, chief financial officer at Appalachian Community Federal Credit Union ($183.7M, Kingsport, TN), which has offered manufactured home loans for decades. “Not a lot of institutions in our area will do these. For a rural area, it’s an affordable housing product that helps our members get into a home they otherwise wouldn’t be able to.”

Partnerships with local manufactured home dealers have helped ACFCU gain a foothold in this space. Such relationships are key to the credit union’s success. Gobble says other lenders could pursue similar partnerships but question the value of such properties compared to traditional homes rather than the ability of borrowers to repay.

“I think it’s more of a perception of the collateral itself,” the CFO says.

Don’t stop here. Lower prices and better amenities are making pre-built homes an appealing option for credit unions looking to bolster their balance sheet and borrowers stymied by the affordable housing crisis. Read more in “Manufactured Homes Help Close The Housing Affordability Gap.”

Relationships And Realty

Appalachian Community does not advertise its manufactured home loan directly to members but works with manufacturers and local real estate companies to keep the pipeline flowing. In this way, it is similar to indirect lending.

For credit unions considering this space, Gobble says dealer relationships are key. The credit union must have a solid relationship with the dealer to ensure it’s providing the same level of service members would expect to receive at the credit union.

“It’s important to partner with a reputable company,” Gobble says. “Don’t just partner with an individual contractor.”

When it comes to making the loan, the credit union runs its manufactured home loans through the mortgage department rather than through the consumer side of the shop, and Gobble says they perform well thanks both to strong member relationships and rigorous underwriting. The credit union requires that borrowers own the land — a purchase can be added to the deal as a land/home package with the vendor — and that the home sit on a permanent foundation.

The CFO is confident that the persistent high price of stick-built homes means the opportunity in manufactured housing isn’t going away anytime soon.

“We’re not in an area where prices are going to drop,” she says. “This isn’t an area they’ve overbuilt.”

The key, she says, is to change consumers’ pre-existing perceptions of manufactured homes.

“Getting people to understand how it’s built will help them get past that hump of the perception of the value,” she says.

Balance Sheet Capacity

On the opposite end of the continent, TAPCO Credit Union ($719.3, Fircrest, WA) also makes manufactured home loans, but they constitute less than 10% of its overall portfolio says Jeremy Mandery, chief retail and lending officer.

According to Mandery, only a few applications come in per month, but when they do, TAPCO is ready.

“We want to support affordable housing, especially those homes that are less expensive than the median price in our area,” he says. “We’re trying to provide financing that’s reasonable, that makes sense, and that generates a return for our membership.”

The credit union hasn’t formed any partnerships with manufacturing companies, so prospective buyers won’t see TAPCO advertising on sales lots, but Mandery is quick to note that’s because it simply doesn’t have the space on the balance sheet to do so.

“We haven’t established any relationships with manufacturers at this point as we don’t have the balance sheet space needed for this type of commitment,” he says. “If you’re going to go to a manufacturer and be tied up, you want the ability to write whatever they’re going to bring you.”

The Washington-based cooperative provides purchase and home equity loans for manufactured homes, although it only runs purchases through the mortgage side of the shop. If a consumer already owns the property and is looking to tap into equity, the consumer underwriters handle it.

Pricing is also equivalent to rates for stick-built homes.

“We charge the same interest rate whether you have a $1.5 million stick-built home on the water or a $250,000 manufactured home on the smallest piece of property in the metro area,” Mandery says. “We try to be as inclusive in our lending practices as we can.”

To keep an eye on the market, Mandery monitors the space through loan sales and participations to gain a sense of average loan-to-values, property ages, strong markets, risk levels, and more. He also monitors loss rates and often caps LTV at 80% rather than the 90% or higher it might lend on a stick-built home. But when it comes to underwriting, it approaches the process no differently than it would any other house.

“We’re not in the business of foreclosing on properties, so we try to take a person-centric review from an underwriting criteria,” Mandery says. “Are they a good credit risk? Do we think we’ll get paid back? Does the property have anything to do with that? If we think it will work, we try to write the loan.”

Although TAPCO is still testing the waters of manufactured home lending, Mandery says there’s plenty of room to grow.

“I think it’s a growth space simply because the housing market in many locations is just unattainable for people under 35 and making less than $150,000 a year,” Mandery says. “There’s going to be dramatically more demand for it, which leads to an opportunity for credit unions like ours to be back in the first-time homebuyer space again, whereas today it’s just very difficult to be.”

Looking for gaps in your lending strategy? Manufactured home lending isn’t just a niche — it’s a lens into the markets underserved by traditional mortgage products. Peer+ helps credit unions uncover patterns in home lending performance, identify where members lack access, and benchmark approval rates against peers. Request a demo to see Peer+ in action.

The post Small House, Big Opportunity: 2 Takes On Manufactured Home Loans appeared first on CreditUnions.com.

LOAN ORIGINATIONS
FOR U.S. CREDIT UNIONS
SOURCE: CALLAHAN & ASSOCIATES

• A sharp increase in first mortgage volume underpinned a jump in total real estate originations in the first quarter of 2026. That segment reached its highest level since 2022.
• Declines in mortgage rates, although modest, spurred demand, with borrowers re-entering the market after a prolonged pause during peak rate conditions. Increases in mortgage rates could jeopardize this trend.
• The market is moving away from a purchase-only dynamic. Early signs of refinance activity are reappearing alongside purchase originations, driven by borrowers with higher-rate loans taken out in the past two-and-a-half years.
• Borrowers are acting opportunistically — re-engaging quickly when rates improve, even slightly — suggesting this is a short-term lending opportunity rather than a sustained refinance wave.
• Although origination volumes are improving, the trend represents selective re-entry into the market, not a broad normalization. Credit unions would be well-served to target their lending strategies.

Don’t stop here. Callahan clients can dive deeper into how shifting borrower behavior, product mix, and early risk signals are reshaping mortgage lending. The full analysis is available now on the Callahan client portal. Read it today.

The post Mortgage Lending Is Back, But It Looks Different appeared first on CreditUnions.com.

For years, credit union membership growth was one of the clearest signals of the movement’s strength. That momentum is beginning to shift.

Annual membership growth in the first quarter slowed to 1.81%; that’s one of the weakest levels in years. Some institutions even reported quarterly declines. Perhaps counterintuitively, though, this isn’t a story of disengagement. Consumers are still borrowing, saving, and opening accounts. What’s changed is how they build relationships.

Consumers are increasingly spreading their financial activity across multiple providers, making it harder for credit unions to capture primary relationships. At the same time, credit unions are pulling back from traditional acquisition channels like indirect auto lending, further reducing membership inflow.

Yet the industry is still growing. Loan and share growth remain relatively strong, thanks not to new members but deeper relationships with existing ones. As credit unions shift from growing headcount to fattening wallet share, they must focus on achieving PFI status as much as on attracting members in the first place.

MEMBER GROWTH VS. SHARE GROWTH VS. LOAN GROWTH
FOR U.S. CREDIT UNIONS | DATA AS OF 03.31.26
SOURCE: CALLAHAN & ASSOCIATES

• Membership growth in the first quarter of 2026 slowed to 1.81%, marking a steady decline from prior years.
• Loan growth has picked up after a sharp post-peak decline. It was 5.13% as of March 31, signaling steady borrowing demand.
• Share growth has normalized from elevated pandemic-era levels and has settled around 4.66%, reflecting a more typical deposit environment.
• Loans and shares are growing two to three times as fast as membership, indicating new members are no longer driving growth. Instead, the industry is shifting toward deeper relationships.

When members know you care, they stay. As financial relationships fragment across providers, the credit unions earning PFI status are building emotional trust as much as they’re competing on rates or products. Gallup research shows emotionally engaged members are 5.4 times more likely to stay and 2.5 times more likely to hold multiple products, exactly the depth of relationship credit unions need most right now. Learn more.

The post Where Have All The Members Gone? appeared first on CreditUnions.com.

No. 1: Consumers Need Support Now More Than Ever

INDEX OF CONSUMER SENTIMENT
FOR 900-1,000 MONTHLY WEB INTERVIEWS | DATA AS OF MARCH 2026
SOURCE: UNIVERSITY OF MICHIGAN SURVEYS OF CONSUMERS

• After a brief rebound in early 2024, the Index of Consumer Sentiment declined steadily throughout 2025 and into 2026. The reading of 55 in March 2026 was even lower than the peak days of the COVID pandemic and signals genuine household anxiety rather than routine fluctuation. When consumer outlook is this uncertain, households often pull back on borrowing, delay major purchases, and prioritize liquidity.
• Of course, social media and the 24-hour news cycle can skew the perception of economic health away from household reality. Indeed, certain segments of the economy are doing OK; unfortunately, others are hurting. With this context, it’s important to remember that macroeconomic data represents the average and credit unions serve those on the lower end of that economic spectrum.
• For credit unions, today’s reality is both a warning and an opportunity. Members under financial stress are more likely to need guidance, restructuring options, and financial counseling. Institutions that show up proactively — rather than waiting for delinquencies to surface — will deepen loyalty when it matters most.

Watch Trendwatch on demand today. Did you miss this quarter’s live Trendwatch webinar? No worries! Catch it on demand. Learn about first quarter performance trends from industry experts and take note of the practical insights you can act upon today to strengthen strategy, serve members better, and perpare for what comes next. Watch Trendwatch today.

No. 2: Member Growth Is Historically Low; Confounding Factors Are At Play

ANNUAL MEMBER GROWTH
FOR U.S. CREDIT UNIONS
SOURCE: CALLAHAN & ASSOCIATES

• Membership growth remains sluggish despite a slight uptick in the first quarter. Much of the prior-year volume came from indirect lending — a channel that’s often expensive and ill-suited to building lasting relationships. Credit unions have pulled back from indirect lending and now must find new ways to tell their story and fill their lending pipelines.
• Membership growth is diverging by asset size — smaller credit unions are posting rates as low as -0.5%, whereas larger peers hold near 1.8%. Scale plays a role, but so does an education gap: younger members increasingly don’t know what they’re missing. Smaller credit unions have the opportunity to make the case for community finance to a generation that hasn’t heard it yet.
• On the bright side, relationships with existing members are deepening. Products per member and average relationship balances are up, as are most product penetration rates. In short, fewer new members might be joining the movement, but credit unions are still heavily supporting their core member base.

No. 3: First Mortgages Are Carrying Loan Growth

YEAR-TO-DATE LOAN ORIGINATIONS
FOR U.S. CREDIT UNIONS
SOURCE: CALLAHAN & ASSOCIATES

• Year-to-date loan originations hit $152.6 billion as of the first quarter of 2026; that’s a 13.6% increase from this time last year.  First mortgages have been doing the heavy lifting. As rate cuts filter through the housing market — and prices stabilize in many markets as wages partially catch up — demand for homebuying and refinancing is returning.  Credit unions with a strong mortgage infrastructure are well-positioned to capitalize on this trend, especially in the relationship-driven refinance space where credit unions historically thrive.
• Other real estate and commercial real estate categories contributed to loan growth to a lesser degree. Auto lending, which dominated origination activity in prior years, is notably absent as a growth driver — a reflection of the industry’s retreat from indirect lending, tariffs, elevated vehicle prices, tighter consumer budgets, and the continued hangover from pandemic-era buying behavior.

No. 4: Asset Quality Is Improving … Seasonally, At Least

ASSET QUALITY RATIO
FOR U.S. CREDIT UNIONS
SOURCE: CALLAHAN & ASSOCIATES

• Credit unions reported the typical first quarter improvement in the asset quality ratio. Net charge-offs and delinquencies ticked down from elevated year-end levels. Delinquency ratios came in at 0.81%, whereas net charge-offs settled at 0.84%, for a combined ratio of 1.65%. These numbers are better than the fourth quarter of 2025 but remain higher than pre-pandemic norms.
• First quarter seasonality is relevant. Tax refunds, holiday debt payoffs, and January financial resets temporarily reduce delinquency. The real test will come in the second and third quarters when the buffer fades and credit unions will see if consumer sentiment reflects repayment reality. The good news? The industry remains well-covered for delinquency and has a strong net worth on average. The cushion is there to help struggling members at a time when banks or other financial institutions might turn them away.

No. 5: Now Is The Time To Build Capital And Invest Strategically

OPERATING EXPENSE RATIO VS. NET INTEREST MARGIN, ANNUALIZED
FOR U.S. CREDIT UNIONS
SOURCE: CALLAHAN & ASSOCIATES

• The gap between the net interest margin and the operating expense ratio is the widest it’s been in decades — a 0.33 percentage point spread that reflects the unusual and favorable environment credit unions have been operating in since rates began rising in 2022. For now, this margin cushion is providing real earnings flexibility.
• Even with slowing non-interest income revenue, and increasing provision expense, credit union ROA is up to 0.85% annualized. This is a relatively high return on assets, giving the industry some freedom to build allowance and net worth cushions.
• However, pressures are building from both directions. If rates ease, asset yields historically compress. Meanwhile, operating expenses rarely come down for long — technology investments, staff costs, and compliance burdens continue to climb with inflation. Credit unions that treat today’s margin environment as permanent could be caught off guard. In the meantime, the window to build capital, invest strategically, and reduce structural cost is still open. Effective investment in operational efficiency is a key way to manage expanding operating costs.

See the patterns behind this quarter’s trends. Trendwatch highlights key themes drawn from industrywide data. Peer Suite’s Premium level helps leaders evaluate their credit union’s performance across the same core metrics, using handpicked peer groups and deeper context to support understanding and discussion. Start your free 30-day trial.

See You Next Quarter! CreditUnions.com updates this page with the freshest FirstLook credit union data every quarter, so don’t forget to come back for insights into the second quarter of 2026.

The post 5 Takeaways From First Quarter Credit Union Performance Data appeared first on CreditUnions.com.

In this environment, traditional risk tools alone aren’t enough. As digital lending scales, portfolio protection must evolve to meet members within the lending experience itself.

What’s Changing In Borrower Behavior?

Economic pressures are reshaping how members approach borrowing and how confident they feel in their ability to repay. The TruStage 2025 Consumer Lending Preferences Research highlights this strain:

• Borrowers feel increasingly financially fragile.
  • 91% worry that a life event could impact their ability to make loan payments.
  • 73% have experienced at least one financial hardship.
• Repayment anxiety is becoming universal.
  • Eight in 10 consumers are worried about their ability to make their loan payment.
  • Rising inflation, income instability, and higher household debt loads are intensifying this concern.
• Demand for credit remains strong, despite stress.
  • Six in 10 Americans say the current economy makes them more willing to take out a loan for a major purchase or unexpected expense.
• Members want protection built into the lending experience.
  • 70% are more open to credit union payment protection than in prior years.
  • 96% prefer to learn about payment protection before finalizing a loan.

These shifting expectations set the stage for a thoughtful approach to mitigating risk while helping members feel supported and confident.

Why This Matters For Credit Unions

Missed payments are rarely the result of unwillingness to repay. More often, they’re triggered by short‑term disruptions — job loss, illness, injury — that affect multiple aspects of a household’s finances at once. Traditional credit indicators may not capture these real-time stressors, leaving both borrowers and lenders exposed.

Credit unions can protect members and strengthen portfolio resilience by embedding safeguards directly into the loan journey, along with continued face-to-face discussions with loan officers.

The Integrated Protection Approach

When lenders integrate payment protection in the loan workflow and include payment protection in the loan app, members gain confidence at the moments that matter.

In our research, 74% of borrowers said they expect more than one opportunity to learn about payment protection across the loan journey. With a multitouch, multichannel approach, you’re able to reach members when and how they prefer to learn about and consider this protection.

Embedded insurance for lenders is designed to help reduce delinquencies by giving borrowers a safety net, yet it avoids disrupting approvals or elongating cycle times. Think of it as portfolio resilience for lenders through a better member experience.

By presenting options seamlessly, lenders can improve conversion rates without the feel of an add-on sale.

Operationalizing It — Without Slowing The LOS

Credit unions can incorporate consumer loan protection solutions effectively by using user interface (UI) patterns that feel native to the loan origination system (LOS). Best practices include:

• Contextual prompts during pricing and terms review that explain how coverage helps mitigate loan default protection risks.
• Clear, plain‑language disclosures that build trust and support financial health protection.
• Real‑time selection and instant confirmation so protection carries through automatically.

The Leadership Opportunity

Today’s borrowers expect transparency, stability, and personalized support. By embedding payment protection insurance into your digital lending journey, you can help protect members from the financial stress they worry about most. It’s a practical way to keep credit flowing, maintain member trust and scale with confidence.

Learn how you can embed TruStage loan protection to support your members and your portfolio.

Danielle Sesko is the director of product management at TruStage. TruStage is the marketing name for TruStage Financial Group, Inc. its subsidiaries and affiliates. Corporate headquarters are located in Madison, WI.

The post Balancing Growth And Risk In Uncertain Lending Environments appeared first on CreditUnions.com.

Auto lending remains a cornerstone of credit union growth, but the foundation is shifting. Rising vehicle costs, record loan balances, and the rapid expansion of longer-term financing are creating a structural increase in negative equity that is reshaping both borrower behavior and portfolio risk.

Recent data confirms the scale of the shift. The average amount financed for a new vehicle reached a record $43,899 in Q1 2026 — nearly $44,000 committed to an asset that begins losing value the moment it leaves the lot¹. Monthly payments have climbed alongside that figure, and nearly one in five borrowers is now committing over $1,000 every single month just to keep a vehicle in the driveway.

When that payment is attached to a seven-year loan on a depreciating asset, it is not simply a financing decision. It is a financial trap that is becoming harder and harder to exit. These are not isolated data points. They reflect a broader change in how vehicles are being financed and what it takes for borrowers to remain in the market.

To manage rising costs, borrowers are increasingly turning to longer loan terms. Loans of 84 months or more now represent a growing share of originations, rising sharply in recent years. In some segments, particularly trucks and higher-trim SUVs, extended terms are becoming the default because they are often the only way to achieve a target monthly payment. For credit unions, this raises an important strategic question: are longer terms solving the affordability problem, or simply pushing risk further into the future?

Negative Equity Is Becoming More Common

Negative equity has long been a part of auto lending. What is changing is how persistent and widespread it has become — and how deeply its roots trace back to the pandemic.

During the pandemic, a semiconductor shortage created a severe shortage of new vehicles on dealer lots. Prices soared, and buyers, either flush with disposable income or lacking other transit options, paid up. That wave of inflated purchases is now coming back around. As those borrowers attempt to trade in, they are discovering that their vehicles are worth far less than they owe.

According to a recent Wall Street Journal analysis, about 30% of borrowers who traded in a vehicle in Q1 2026 carried negative equity, with an average shortfall of $7,200 — a 42% jump compared with the same period five years earlier⁷. Borrowers with negative equity financed an average of nearly $56,000 for a new vehicle in Q1 2026, roughly $12,000 more than the typical buyer, resulting in average monthly payments of $932 — the highest ever recorded.

The downstream consequences are significant. Consumers who rolled over negative equity from a prior vehicle loan were more than twice as likely to have their car repossessed within two years, compared with those who netted money on a trade-in, according to a 2024 study from the Consumer Financial Protection Bureau⁷. Default rates on car loans rose in March 2026 to their highest levels since 2010.

At the same time, affordability pressures are not easing. Used vehicle prices have recently increased by approximately $1,500 in a short period, adding further strain to both new and pre-owned buyers. As more consumers shift toward used vehicles to manage costs, they are encountering many of the same challenges.

The Trade-Off Behind Longer Terms

Extending loan terms has become the primary tool for maintaining affordability. It works in the short term by lowering monthly payments. However, it introduces longer-term risks for both borrowers and lenders.

Borrowers remain in negative equity positions for a longer portion of the loan. The likelihood of rolling that negative equity into the next transaction increases. Credit unions, in turn, carry exposure on depreciating collateral for extended periods.

In effect, longer terms address payment, but not financial sustainability. This creates a difficult balancing act. Without competitive payments, credit unions risk losing volume to dealerships and captive lenders. But relying solely on longer terms can increase portfolio risk and limit future lending opportunities.

A Structural Alternative To Extended Terms

Addressing affordability without compounding risk requires a different approach. Residual-based financing offers an alternative structure that changes how vehicle loans are built.

Instead of making payments on the full loan amount, monthly payments in a residual-based structure are calculated on the difference between the purchase price and a guaranteed future value set at origination. The result: lower payments without adding months to the term. At maturity, borrowers can keep the vehicle, refinance, trade, or walk away — a clean exit that breaks the negative equity cycle rather than extending it.

This shift creates several advantages. Borrowers can achieve lower monthly payments without extending terms beyond typical ranges, often 24 to 72 months. At the end of the term, they have clear options: keep the vehicle, refinance, trade, or return it and walk away from the remaining balance. Most importantly, this structure helps reduce exposure to negative equity by aligning the loan with expected vehicle value over time.

Supporting Both Member Outcomes And Portfolio Performance

For credit unions, improving affordability is not just about originating loans. It is about ensuring those loans perform over time. When borrowers are placed into payments they can realistically afford, the benefits extend beyond the individual transaction. Lower payment stress can contribute to stronger repayment behavior, improved member satisfaction, and more stable portfolio performance.

Residual based financing also provides a way to compete more effectively in a payment-driven market. Dealerships and captives continue to focus heavily on monthly payment as the primary decision factor. Without comparable options, credit unions risk losing relevance in both direct and indirect channels. By offering an alternative to extended-term financing, credit unions can maintain competitive positioning while managing risk more effectively.

Residual-based financing also delivers a meaningful yield advantage for credit unions because the loan amortizes to the guaranteed future value rather than to zero. This produces a higher effective yield compared to a conventional loan of the same term, an outcome that supports portfolio performance alongside the member benefits.

Expanding The Lending Toolkit

One of the more telling dynamics in today’s market is that many borrowers are not choosing longer loan terms because they want to. They are choosing them because they feel they have no other option. That perception presents an opportunity. Residual-based financing introduces another lever for managing affordability — one that does not rely on extending loan duration or increasing borrower risk. It allows credit unions to structure loans more strategically, balancing payment, equity position, and portfolio performance.

Looking Ahead

J.D. Power analysts have explicitly warned of a “day of reckoning” as negative equity balances and long-term loan exposure accumulate across lender portfolios. That language is striking because it signals not a gradual shift but a potential inflection point. The credit unions best positioned for what comes next will be those that moved before the pressure became acute, not those still extending terms and hoping the market stabilizes.

Negative equity is becoming more embedded in the auto finance system, driven by rising vehicle costs, higher payments, and the growing reliance on extended loan terms. Addressing this challenge requires a shift in approach.

By incorporating alternative structures such as residual-based financing, institutions can help members avoid or exit the negative equity cycle while maintaining competitive positioning and supporting long-term portfolio health.

The goal is not simply to make the next payment work. It is to ensure that each loan puts the member in a stronger position for the next financial decision.

If your credit union is still relying solely on term extension to compete on affordability, you are solving today’s payment problem while building tomorrow’s portfolio risk. Join us on May 19 to explore a different path.

Register for our live webinar, Beyond Conventional Auto Lending: The Advantages of AFG Residual-Based Financing, on May 19 at 1 p.m. CT / 2 p.m. ET, where we’ll explore how residual-based financing works and how it can help your credit union address affordability challenges, reduce negative equity exposure, and strengthen portfolio performance.

Auto Financial Group (AFG), a Houston-based company, provides an online, residual-based, walk-away vehicle financing product called AFG Balloon Lending, as well as vehicle leasing and vehicle remarketing to financial institutions across the United States. For more information about AFG, call toll free at 877-354-4234 or visit www.autofinancialgroup.com.

Tim Kelly is president and chief operating officer of Auto Financial Group. He has more than 25 years’ experience delivering solutions to financial institutions. Contact him at tkelly@autofinancialgroup.com.

The post The 84-Month Trap: How Negative Equity Is Quietly Undermining Your Auto Portfolio appeared first on CreditUnions.com.