Reading Into the Numbers

Well it’s that time of year when Callahan & Associates releases their quarterly Trendwatch, and reports on Credit Union performance. I’m always interested in the mortgage market share. It should be no surprise to anyone that first mortgage originations in Credit Unions dropped in the final quarter of the year. Volume fell by 24% from the prior quarter and 34% year over year. Credit unions originated $23 billion in first mortgages in the fourth quarter making it as the lowest volume quarter since third quarter 2011. Not good.

But the good news is that overall mortgage lending fell at an even faster rate. Total volume declined by 27% from the prior quarter and 42% year over year.

So what’s all this mean?

Well, first it means that Credit Unions gained market share. We went from a quarterly market share of 7.5% to 7.8% when comparing quarters and jumped a full percentage point from one year ago. Nicely done & quite memberlicious!

Mortgage Market Share 4Q 2013

So why did this happen? Well, I’ve got three possible theories.

1. It means that as the refinance volume has plunged, Credit Unions did a bit better with purchases than their for-profit peers.

2. It means that since fewer members choose us for refinances in the first place, we had fewer to lose.

3. It means that since our turn times were longer than those of the banks, we were still closing “older” loans in the fourth quarter.

#1 would be encouraging and show signs for some positive momentum in 2014.

#2 or #3 would be depressing.

Perhaps there is more insight to be gained from the Mortgage Bankers Association data. The overall decline in mortgage volume, according to the MBA Mortgage Finance Forecast was down from to $293 billion. Of that amount, 53% were refinances. The MBA is predicting that in 2014, there will be $1.1 billion in closings (compare this to nearly $1.1 billion in the first 6 months of 2013). They also predict that refinances will fall to 40% of total business.

So I’m going to be optimistic and lean towards #1 above. And all this tells me that we’ve got opportunity to capture a bigger market share as volume falls. Every couple of weeks one of the big banks is down sizing mortgage staff and mortgage players of various sizes are being bought and sold.

On the other hand, credit unions are holding true to form. We’re carrying out our mission of helping members and in this case trying to be memberlicious with home ownership. (And others are noticing as well – see the New York Times story)

So stay the course or put more effort into mortgage lending and keep working to help more members.

3 thoughts on “Reading Into the Numbers

  1. Tim, your thoughts are being supported by what I am seeing in my travels, CU folks of all sizes are hitting purchases at unprecendented levels, great to see!! Rick

    • Rick
      Thanks for reading the blog and sharing what you are seeing out in the field. I’m hopeful that we’ll see strong CU purchase numbers for the first quarter.
      Tim

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