A Health Check of the Credit Union Mortgage Market

Each year, CU Times dips its net into the ocean of data available to the public from the Home Mortgage Disclosure Act (HMDA).

This spring the CFPB released loan-level data for 2024. The exact size of the 2024 pool won’t be easily known until another file is released later this summer. But it’s likely to be similar to the 2023 data, which comprised 11.5 million loans originated by 5,113 lenders. The batch included 1.7 million loans originated by 1,563 credit unions. CU Times pulls data on a limited number of credit unions that account for a big chunk of the movement’s production.

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Last year, we sampled 31 credit unions. This year we increased the sample size to 34, including the 28 largest producers of first mortgages in 2024 based on NCUA data and plus six others near the top chosen for geographic diversity. Data for 2023 consists of data for the same 34 credit unions.

We focused on first mortgages narrowed to loans to owner-occupants and single-family houses. HMDA data for the 34 credit unions shows their owner-occupied single-family first mortgages accounted for 42% of residential first mortgage production counted by NCUA for both 2023 and 2024.

CU Times sampled HMDA data for 34 credit unions, which comprised 42% of residential first mortgage originations reported by NCUA for both 2023 and 2024.

Looking more carefully at the data gives us more confidence that this group of 34 is a decent representation of results for all credit unions.

For one thing, the growth rates are similar. Residential first-mortgage originations grew only slightly faster (7%) last year among the 34 credit unions in the sample from HMDA data, than originations reported by the NCUA for the other 4,516 credit unions, which grew 6%.

For another, the loans were dispersed by state in a way similar to the U.S. population. We compared the percentage of the 34 credit unions’ count of loans by state to the percentage of the U.S. population by state. For 38 states the percentage differed by less than 1 percentage point either way, and for all but two outliers the difference was within about 3 points.

California was one outlier, albeit a huge one. California had 6.5% of the loans from the 34 credit unions, but 11.5% of the U.S. population last year – showing the sample under-represented the population by 5 percentage points. The other outlier was North Carolina, which is hugely over-represented by 11 points because the sample includes State Employees’ Credit Union of Raleigh. SECU is not only the nation’s second-largest credit union, but it has nearly all of its loans in the Tar Heel state.

Approval rates improved for first and second liens, but not by much. For first mortgages, 52% of the applications led to originations, up from 50% in 2023. For home equity lines of credit and other second liens, the approval rate rose from 55% in 2023 to 56% in 2024.

Overall growth in loan production was tepid, but it depended where the loans went. The Midwest was especially strong, while loan originations fell in the South.

The sample shows that the total number of their loans originated nationwide last year was 3% more than in 2023, while the amount rose 3.2%. The average loan last year was $341,693, up 3.8%.

But that obscures some significant regional differences:

In the Midwest the number of loans originated rose 11.1% and the amount rose 18.4%. The average loan last year was $276,046, up 6.5%.
In the South the number of loans originated fell 7.2% and the amount fell 4.8%. The average loan last year was $303,030, up 2.7%.
In the Northeast the number of loans originated rose 5% and the amount rose 11.6%. The average loan last year was $379,376, up 6.2%.
In the West the number of loans originated rose 4.4% and the amount rose 5%. The average loan last year was $452,613, up 0.6%.

About 15% of the loans went to borrowers with incomes that were less than 80% of the median income for their county.

Overall, 15% of the number of loans went to the relatively poor: Borrowers whose household income was less than 80% of the median household income in their county.

About 30% of the number of loans went to the relatively rich: Households with income that was twice their county’s median county average.

We looked at BECU and SECU of North Carolina separately because they are heavy in states with different median incomes.

BECU primarily lends in Washington State (92% of 2024 first mortgages), where the median income in 2022 was $91,306 – well above the U.S. median of $74,755. SECU had 97% of its first mortgages in North Carolina, where the median is $71,970.

We wanted to see how these credit unions – both with reputations for serving low-income households – held up under HMDA measures for loan distribution among income groups.

HMDA measures the borrower’s income to the median income of their county, which is designed to account for disparities in wages like those between North Carolina and Washington.

And at least for these two credit unions, the methodology held. For BECU, 15% of its loans went to households earning less than 80% of their county’s median, and it was 17% at SECU.

Navy Federal was pulled out because it’s so large that it distorts averages for others (and for technical reasons regarding limits on numbers of records we can handle without clogging our rusty machines). Navy Federal lent only 8% of its loans to households in the under-80% category.

We also ran numbers on Alliant, the online credit union based in Chicago, after seeing its high average loan amount ($517,630) and its big increase in lending. Of its loans, 9% went to households with incomes below 80% of the county median and a whopping 51% went to households earning twice or more of the county median.

Looking for the culprits behind movements in the numbers, some of the usual suspects emerged along with some fresh faces. The four biggest gains in the amount of first mortgages occurred at:

Navy Federal Credit Union of Vienna, Va., outside Washington, D.C., which originated 38,095 first mortgages for $13.7 billion. The number rose 4,381 (+13%) and the amount rose $1.97 billion (+17%). The average loan was $358,995, up 3%.
Alliant Credit Union of Chicago, which originated 2,061 first mortgages for $1.1 billion. The number rose 1,425 (+224%) and the amount rose $777.9 million (+269%). The average loan was $517,630, up 14%.
Lake Michigan Credit Union of Grand Rapids, Mich., which originated 8,227 first mortgages for $3.1 billion. The number rose 1,121 (+16%) and the amount rose $419.9 million (+16%). The average loan was $371,902, essentially unchanged.
CommunityAmerica Credit Union of Lenexa, Kan., which originated 3,120 first mortgages for $1.1 billion. The number rose 756 (+32%) and the amount rose $396.7 million (+60%). The average loan was $340,010, up 21%.

The three biggest declines occurred at:

PenFed Credit Union of Tysons, Va., outside Washington, D.C., which originated 4,510 first mortgages for $1.6 billion. The number fell 2,155 (-32%) and the amount fell $761.9 million (-32%). The average loan was $356,725, essentially unchanged.
Digital Federal Credit Union of Marlborough, Mass., which originated 1,166 first mortgages for $536 million. The number fell 1,289 (-53%) and the amount fell $686 million (-56%). The average loan was $459,597, down 8%.
State Employees’ Credit Union of Raleigh, N.C., which originated 14,772 first mortgages for $3.6 billion. The number fell 3,230 (-18%) and the amount fell $639.1 million (-15%). The average loan was $242,213, up 3%.

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