Summit CU Pares Home-Buying Costs for Some

As the costs of buying a home soared this year, Federal Home Loan Bank grants helped lower the burden for some low-income borrowers.

Summit Credit Union of Madison, Wis. ($6.6 billion in assets, 248,245 members as of June 30) announced Thursday that it was able to help 70 borrowers through the $700,000 in grants it was provided this year by the Federal Home Loan Bank of Chicago. Buyers must earn no more than 80% of the area’s median income.

Kristin Nesbitt, Summit’s vice president of mortgage lending, said the homebuying market in Wisconsin has been tough. “Interest rates are affecting affordability for homebuyers, and the lack of housing supply is contributing to multiple offers on nearly every home that is put on the market,” she said.

The grants reduce down payments, closing costs or pre-paid expenses by $10,000 for each of the 70 borrowers who benefitted from January to August, Nesbitt said.

“Some borrowers were able to afford a little bit more of a house,” Nesbitt said. “Some were able to keep their own saved funds on hand for touch-ups, or new appliances that didn’t need to be financed and/or building or keeping an emergency fund.”

The Mortgage Bankers Association reported Thursday that half of U.S. mortgage payments were more than $2,162 in July, unchanged from June’s median and up 17% from a year earlier.

“It has been a challenging market for prospective buyers this summer, as high home prices, low housing supply and high mortgage rates have diminished purchasing power,” Mortgage Bankers Association President/CEO Bob Broeksmit said.

The MBA found purchase applications for the week ending Aug. 18 were down 30% from a year earlier.

Joel Kan, the MBA’s deputy chief economist, said worries that the resilient economy will keep inflation stubbornly high pushed the 30-year fixed rate to 7.31% – the highest level since December 2000.

“Applications for home purchase mortgages dropped to their lowest level since April 1995, as homebuyers withdrew from the market due to the elevated rate environment and the erosion of purchasing power,” Kan said. “Low housing supply is also keeping home prices high in many markets, adding to the affordability hurdles buyers are facing.”

Broeksmit said the MBA expects mortgage rates later this year to fall off recent highs, which could bring some buyers back into the market.

Summit punches well above its weight in mortgages. It ranked 51st among credit unions in December based on assets, but ranked 23rd for its $1.1 billion in first mortgage originations for the full year of 2022.

First mortgages accounted for about 40% of Summit’s total $1.2 billion in originations in the six months ending June 30.

Summit’s first mortgage originations in the first six months of 2023 were $502.5 million, down 26% from 2022’s first half. That was doing better than the Top 10 credit unions, whose first mortgage originations fell 59% to $12.4 billion in the first half.

Among all lenders, the MBA estimated first-half originations fell 43% to $796 billion.