Used auto loans have historically been the core of credit unions' loan portfolios, but record-low mortgage rates throughout the year combined with auto dealers' 0% financing offers, made for a different story in 2002. In October 2001, used cars dominated credit unions' loan portfolios – accounting for 20.64% – but by December, fixed rate mortgages began to cut into used cars' slice. By October 2002, fixed rate mortgages had increased 11.39% compared to used auto loans 8.61%. Only home equity loans (18.39%) and other loans (20.23%) outpaced fixed rate mortgages, but much of the home equity loan activity CUs saw during the year was caused by members taking out home equity loans to pay off other debts, CUNA Economist Steve Rick said. Rick predicts credit unions will see a total year 2002 fixed-rate mortgage growth of 14.5-15.0%. But as rates start to inch up and members' appetite for refinancing existing mortgages or buying new homes is satisfied, Rick says credit unions should expect to see about a 2% growth in their fixed-rate mortgage balances in the first quarter of 2003. That would be about half of the business they did during the first quarter of 2002. [email protected]

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