While the supposed "housing bubble" may not have burst as many expected, there's no question that the tide has recently shifted in the mortgage lending marketplace. Rising interest rates have left credit union mortgage lenders with less wind in their sails, and as the housing market has cooled, competition for real estate loans has heated up.

Unfortunately, this slowdown all but guarantees that credit unions are at the end of a three-year "golden period" where the industry made huge strides with its mortgage lending efforts. Riding on the crest of the housing market wave, credit union real estate portfolios grew from $173 billion in 2003 to $238 billion at the end of June 2006. Real estate loans now comprise 48% of total loans and 33% of total assets, both record highs for credit unions. Yet despite this tremendous growth, credit unions only boosted their share of the total real estate loan market to 2.5%.

Without question, challenges lie ahead for credit union mortgage lenders. Obviously, the real estate market is extremely competitive, and the changing economic conditions will make mortgage lending even more difficult. NAFCU expects the pace of economic activity to slow from 5.6% during the first quarter to a "soft landing" pace of about 3% over the second half of this year.