Credit Unions Lose Share in Still-Booming Mortgage Market

The Mortgage Bankers Association’s latest forecast expects refinances to be stronger than expected in the third quarter, further softening the overall drop in first-mortgage originations for the full year.

The latest MBA and NCUA data showed credit unions’ share of first mortgages was up slightly from 2020’s fourth quarter, but down sharply from the first quarter.

Meanwhile, the National Association of Realtors on Tuesday reported sales of existing homes fell 0.9% from April to a seasonally-adjusted annual rate of 5.80 million in May, marking the fourth monthly drop in a row. However, May sales were 44.6% higher than a year earlier.

The MBA’s forecast, which is not seasonally adjusted, expects second-quarter purchase originations to be $460 billion, up 32% from 2020’s second quarter and 44% higher than 2021’s first quarter.

NAR chief economist Lawrence Yun said the modest April-to-May decrease puts home sales on a course to pre-pandemic levels.

Prices, however, continue to rise past previous records as buyers compete for homes that are selling quickly, often above listing price. The median existing-home price for all housing types in May was $350,300, up 23.6% from May 2020. Prices have risen every month since March 2012.

“Lack of inventory continues to be the overwhelming factor holding back home sales, but falling affordability is simply squeezing some first-time buyers out of the market,” Yun said.

“The market’s outlook, however, is encouraging,” he said. “Supply is expected to improve, which will give buyers more options and help tamp down record-high asking prices for existing homes.”

The MBA’s June 18 forecast made no changes from its May 19 forecast in its expectations of purchase mortgage originations rising 15.6% to $1.66 trillion this year, followed by increases of 5.1% in 2022 and 2% in 2023.

But the Washington, D.C.-based group ratcheted up its third quarter refinance estimate by 27%. As a result it said it now expects refinances in the third quarter to be $300 billion, more on par with the $276 billion in 2019’s third quarter, but still far lower than the $658 billion in 2020’s third quarter.

The third-quarter change means refinance originations will be $1.81 trillion for the year, which will be 24% lower than 2020. However, in January the MBA said it expected refinances would fall about 47% this year.

The total of purchase and refinances are now expected to $3.47 trillion this year, down almost 10% from 2020, but not bad compared with a record year in 2020 and better than the 24% drop that the MBA had forecast in January.

NCUA data released this month showed first-mortgage originations by credit unions were $74.6 billion in the three months ending March 31, up 49.5% from 2020’s first quarter. Originations by all lenders nearly doubled to $1.09 trillion.

Credit unions accounted for 6.8% of first-mortgage originations among all lenders in the first quarter, up from 6.4% in the fourth quarter, but down from 8.9% in 2020’s first quarter.

The 10 largest credit union originators during the first quarter produced $16.8 billion in first mortgages, up 47.4% from 2020’s first quarter. They accounted for 16% of credit union assets, and 23% of first-mortgage originations. The Top 10 were:

1. Navy Federal Credit Union, Vienna, Va. ($144.5 billion in assets, 10.3 million members) had first-mortgage originations of $5.9 billion, up 18.4%.

2. PenFed Credit Union, Tysons, Va. ($27.3 billion, 2.2 million) had first-mortgage originations of $2.7 billion, up nearly three-fold from $965.5 million in 2020’s first quarter.

3. Lake Michigan Credit Union, Grand Rapids, Mich. ($10 billion, 406,861) had first-mortgage originations of $1.6 billion, up 52.8%.

4. Star One Credit Union, Sunnyvale, Calif. ($10.5 billion, 114,286) had first-mortgage originations of $1.4 billion, up four-fold from $331.3 million in 2020’s first quarter.

5. State Employees’ Credit Union, Raleigh, N.C. ($49.6 billion, 2.6 million) had first-mortgage originations of $913.5 million, down 1.5%.

6. SchoolsFirst Federal Credit Union, Santa Ana, Calif. ($25.3 billion, 1.2 million) had first-mortgage originations of $888 million, up 4.6%.

7. First Tech Federal Credit Union, San Jose, Calif. ($14.1 billion, 630,286) had first-mortgage originations of $873.6 million, up 34.8%.

8. Idaho Central Credit Union, Chubbuck, Idaho ($7.3 billion, 444,065) had first-mortgage originations of $872.1 million, up 95%.

9. OnPoint Community Credit Union, Portland, Ore. ($8.2 billion, 432,553) had first-mortgage originations of $854.2 million, up 73.2%.

10. BECU, Tukwila, Wash. ($28.2 billion, 1.3 million) had first-mortgage originations of $809.7 million, up 8.6%.