It was just about one year ago when the headline was CU Mortgage Market share surpasses 8%…as many of us were delighted beyond belief. I recently read a Blog published by one of my board members, Tim Mislansky, stating he was disturbed at the very least that our market share has fallen from grace back below 7%. That does lead me to believe we need to stop and think about that.
We now focus on current regulatory issues contributing to other distractions which may cause us to take our eyes off our goal. In addition, I have stated many times our competitors some of the largest and most powerful financial institutions in the world, are not exactly sitting on their hands. In fact they may have responded to our record gains of last year as their own call to action so-to-speak.
Based on the fact mortgage rates are still at record lows we should have maintained our market share simply from continuing to participate in the refinance craze. This is what scares me even more. The MBA is forecasting interest rates to rise between 4% and 4.5% by the end of next year. In all likelihood this will be a real blow to refinance transactions estimated by more than 50% also according to the MBA. Purchase money loans (in the news quite a bit of late) will make up a larger portion of total originations. With that in mind is the Credit Union system positioned well enough to capture more purchase money loans, in other words how are your Realtor relationships developing?
When we examine the correlation between credit union profitability and 1st mortgage lending volume, we easily see they are closely related. I think it is financially unhealthy to risk our future growth and increased profitability by ignoring ALL of the opportunities in mortgage lending.
Even the best of the best have challenges. I would say recruiting and compensating the right people; effective utilization of state-of-the-are technology and most importantly marketing and communication are the Top Three issues requiring immediate attention. If anyone thinks our challenges are going to be easier I beg to differ. I see the thread throughout my Top Three challenges transcend the entire Credit Union enterprise. It may seem logical to think everyone is working together, but I question if that is true or not.
We live in a much different world and it’s certainly a new world when it comes to home ownership. Do you know the market demographics where you are making loans? Is it changing? I serve on the HOA board where I live. We were reviewing our community demographics and noticed many of the re-sales in our community have been purchased by investors or at least all-cash transactions. Granted Las Vegas is looking more and more like a good investment since we have bounced back very little. We also see an increase in the number of properties occupied by renters as opposed to owners. All of this relates to the decade long overall decline in the homeownership levels nationwide. While I don’t have answers for all of this but I respectfully suggest you find the answers and develop strategies for the next few years or perhaps find your organization losing a lot of ground to the Wells Fargo’s and B of A’s of the world!
I know there is a lot to do but the stakes are high and rewards can only be earned by those who act effectively and the sooner the better.