Diversification in Membership and Assets is Key to Success, Matz Advises

INDIANAPOLIS, Ind.-NCUA Board Member Deborah Matz told attendees of Mid-States Corporate Federal Credit Union’s Economic Forum that reaching many types of people with a wide array of services will help credit unions diversify membership, as well as assets. “Diversity – both in membership and in assets – is the best way for credit unions to spread out their risk,” Matz emphasized. She indicated the mortgage market as a prime example as the refinancing boom withers away and new purchases are more prominent. “As interest rates rise, refinancing will fall. The future of the market is in purchase mortgages,” she added. Matz urged credit unions to particularly focus on making mortgages to minorities. “While three-fourths of white Americans own their homes, less than half of minorities do. With strong growth projections for minorities, new markets of potential homeowners are about to boom,” she said. Through the year 2020, Matz said, the Asian-American population is projected to grow 80%, Latinos 75%, and African-Americans 28%. In the same time frame, Caucasians are expected to grow just 9%. However, Matz also warned that credit unions should not be caught holding too many fixed-rate mortgages as we enter a climbing interest rate environment. “Even if credit unions choose to sell their new mortgages,” she encouraged them to “retain the servicing. This will build relationships with new members who will use additional credit union services. In turn, this will diversify membership as well as assets.”