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Written by Cyndie Martini
on March 03, 2020

4th quarter mortgage loan originations were up at the 10 largest credit unions, but net income fell by 7.8%, compared to 2018’s fourth quarter, as reported by Credit Union Times. This comes on the heels of a 1.7% decline in the 3rd quarter. The 10 largest credit unions represent one-sixth of all credit union assets and are used as a gauge for the credit union industry.

Despite credit card debt and mortgage originations up due to refinancing, they were not enough to boost year-over-year profits. This is perhaps due to continued slowing in auto loans. Across the board, loans have fallen or slowed year-over-year. Auto and other non-real estate loan originations rose by 8.6% in the 4th quarter, compared to 10.6% last year. Profit margins were also squeezed by rising payroll wages, which rose much faster than average assets.

3-year mortgage rates declined throughout 2019, with a sharp drop at the beginning of the year. The Mortgage Bankers Association (MBA) predicts that mortgage rates will remain low in 2020, hovering around the 4% mark by the end of the year, as reported by the Washington Post. New purchase mortgages are expected to rise by 1.6% in 2020, while refinancing is expected to decline by a whopping 24.5%. Refinancing will be impacted by all of the refinancing activity that occurred in 2019.

New home buyers will continue to face a shortage of affordable homes.  “Tenure length has become a problem in getting homes on the market. If there are 6.5 million home sales every year, about 6 million of those are existing homes. But if people are staying in them for 11 years, there are less existing homes,” Odeta Kushi, deputy chief economist for First American Financial Corporation, said to bankrate.com.

Baby Boomers are holding about 1.6 million homes off-market — a significant supply. To make matters worse for first-time homebuyers, they are caught between large monthly student loan debt payments and ever-rising home prices, making it difficult to come up with an adequate down payment.

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