Why credit unions should offer interest-only loans

Credit unions have long been a staple in local markets serving communities that have been historically underserved by traditional financial institutions. Like banks, credit unions accept deposits, make loans, and provide a wide array of other financial services, but they do so as member-owned cooperative institutions.

Credit unions provide a safe place to save and borrow at more competitive rates in comparison to dominant financial institutions, which is a unique benefit their members can enjoy. Since credit unions are owned by the depositors, they tend to pay higher interest rates on deposits and charge lower interest rates on loans.

Credit unions offer a better financial product than brick-and-mortar commercial banks but are limited in size and geographic footprint. If a member leaves the immediate area, their financial life will be slightly more cumbersome and require some up-front planning. Generally, banks have more robust technology, larger footprints, and often more products and services, which makes them formidable competitors in retail finance.

The commercial real estate market

While credit unions may not necessarily offer as many products as banks, they still face challenges competing for market share in the product segments they do offer. These challenges philosophically mirror one product set in particular, and that is commercial real estate lending.

 

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