By: Joe Gillen
In the past few years, credit unions have increased their membership numbers and attracted consumers with competing needs. However, most members sought out traditional credit union programs, such as reward checking and savings accounts or small business banking products. New data, however, shows that for the first time, credit unions are seeing sizable spikes in the number of members who are seeking mortgages from these community institutions.
As of this year, credit unions are likely to surpass the $100 billion-dollar mark in mortgage loan originations for the first time in history, according to The New York Times. The housing crisis has prompted many current and potential homeowners to rethink the way they do about large, national banks, and many are now turning to their local credit unions to take advantage of more favorable terms. This includes those who are seeking to refinance their existing mortgage and many first-time buyers who are hoping to take advantage of record-low mortgage rates.
"We'd be remiss if we didn’t give a shout-out to the major banks for being annoying to consumers and forcing people to seek out other alternatives," Bob Dorsa, president of the American Credit Union Mortgage Association, told the Times.
Reasons for the trend credit unions
There are several factors that may be prompting Americans' shift away from large banks and toward credit unions. While credit unions still maintain the same standards as national banks regarding qualifications for a mortgage, they are able to typically offer lower closing costs for borrowers, the Times reports. In addition, the news source notes that many credit unions maintain their own servicing of loans, which allows them to be more involved and responsive to their customers needs.
Lastly, many Americans have simply grown distrustful of national banks after a string of scandals regarding mortgage operations were unveiled in recent months. Many large players were accused of tightening their credit to nearly impossible standards, discriminating against lower-income families or failing to give sufficient responses regarding loan denials. A recent study also reveals that customer satisfaction and trust toward large banks has waned recently, while positive consumer sentiment has increased for credit unions. For these reasons, analysts say that credit union membership - which has increased significantly to new highs as of late - will continue to surge as Americans look to these institutions to provide the majority of their financing needs.