Credit unions hit a new mortgage lending record this year, andwhile low interest rates and rising home values contributed to thegrowth, some executives said more effective marketing strategiesplayed a role as well.

On Aug. 11 at its annual credit union seminar in Las Vegas, theChicago-based consumer data firm TransUnion revealed that creditunions captured 11% of U.S. mortgage originations during the firstthree months of 2015, which represents a four percentage pointincrease from credit unions' previous first quarter record mortgageshare of 7% in 2013.

According to Nidhi Verma, TransUnion's director of research andconsulting for financial services, the firm's research revealed twoimportant points relating to credit union mortgage data. First,credit unions saw a smaller percentage drop in mortgage lendingthan other lenders did when mortgage refinancing slowed, andsecond, credit unions rebounded more vigorously when purchase moneylending began to pick up.

The firm's number crunching showed that while overall mortgageoriginations dropped by 48% between 2012 and 2014, they onlydropped by 24% at credit unions. While mortgage originationsincreased by 15% overall from Q1 2014 to Q1 2015, they jumped by35% for credit unions.

“Mortgage originations had declined substantially across theboard in the last few years; however, the decline had been lessdramatic for credit unions,” Verma said. “In the last year alone,it appears significantly more credit union executives are seeinggrowth in this area. Credit unions are becoming bigger players inthe mortgage loan market, something that may serve them well in thefuture as the housing market continues to recover.”

Verma also shared data that suggested credit unions have beenoriginating a greater portion of their mortgages to members withlower credit scores or thinner credit files. While mortgage lendersincreased originations to borrowers with lower credit scores by 4%in Q1 2015 overall, credit unions increased them by 25%.

“As the U.S. economy continues to recover, non-prime mortgageoriginations are growing for both credit unions and the rest of theindustry,” Verma said. “Historically, credit unions have seen lowerdelinquency rates than the rest of the industry, and their focus onmembership expansion makes them well-positioned to take advantageof this growth.”

Credit union executives who attended the seminar said while theyhad not made dramatic changes to their mortgage programs to sparkthe increase, they had taken steps to spread the word to membersabout their mortgage availability.

At the $2.2 billion, 200,000-member Baxter Credit Union, Vice President of Consumer Lending DavidBrydun said his credit union had taken a number of online marketingsteps to keep mortgages in front of members. These includedreleasing more notices about mortgages on the credit union's onlinebanking platform and targeting its mortgage communications moretightly to members who were the best prospects.

Brydun also acknowledged that consistently low interest ratesand rising home values among members had kept the Vernon Hills,Ill.-based credit union refinancing mortgages longer than otherlenders might have.

Stephanie Zuleger, chief lending officer for the $838 million,97,000-member Y-12Federal Credit Union, said the Oakridge, Tenn.-basedcooperative had maintained a wide variety of mortgage options toattract members, in particular a 0% down, 100% LTV option which,she explained, had been very helpful for sparking conversationsabout mortgages with members.

“Of course, we underwrite those very carefully, but members hearabout that option and want to come in and talk about it, and thatgives us a chance to explain the different mortgages available andthe advantages a small down payment on the mortgage can have,”Zuleger explained.

The credit union's goal, she added, was to help the member findthe mortgage best suited for his or her home buying decision nowand into the future.

Transunion also reported the results of a survey of credit unionexecutives in regard to their lending priorities in 2014 and 2015.According to the firm, in 2015, the 90 executive respondents sawauto loans as the greatest opportunity, followed by mortgage loansin second place and credit cards in third place.

Bob Dorsa, president of the American Credit Union MortgageAssociation, cautioned that the record 11% reported by TransUniononly represents one quarter's worth of data, and that the overallfigure for 2015 may come in lower.

However, he also expressed great satisfaction with the number,and noted that it represents the result of credit union persistencein the mortgage space, as well as consumers' growing awareness ofthe value credit union mortgages provide.

“It's been a long time coming, but I have to say it's worth it,”Dorsa said, adding that ACUMA has been working to help convinceboth credit unions and the public at large that credit unions canand should offer mortgages, because it's what their memberswant.

“Consumers are finally becoming aware that credit unions offermortgages, and [are realizing] that they might want a mortgage fromsomeone who really cares that they get the right product anddoesn't just want to sell them something,” Dorsa added.

TransUnion's Aug. 11 research presentation also included newsout of the credit union auto lending space – the firm reported thatcredit union auto loan terms have been steadily rising.

According to TransUnion, the percentage of credit union autoloans with terms longer than 60 months rose by 15% from Q1 2010 toQ1 2015.

The company also reported that 39% of credit union executives itsurveyed said more than 50% of their auto loan originations carryterms longer than 60 months.

Verma contended that the longer loan terms represent both anincrease in car prices and sharply lower interest rates that makethese more expensive vehicles affordable to average credit unionmembers.

“When you consider the way MSRPs [manufacturer's suggestedretail prices] have advanced over the last few years, it's notsurprising that loan terms have lengthened,” Verma argued.

She also maintained that the longer terms actually drove much ofthe auto demand.

“These data points clearly show that greater loan lengths areone of the drivers of growth in the auto market,” Verma added. “Inthe current low interest rate environment, longer loan durationsallow consumers to buy new or used cars with lower monthly paymentsthat fit within their budget. The increase in loan durations showslenders are meeting those consumer needs.”

She also pointed out that the longer loan terms reflect thereality that many cars are lasting longer, which has encouragedborrowers to consider financing their cars over the course of theircars' long lives.