Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

CU System
CUNA economist: 10-year mortgages created by market demand
MADISON, Wis. (1/18/13)--With interest rates at record lows, more credit unions are offering 10-year mortgages as members become comfortable with shorter terms or seek to refinance existing loans, said a Credit Union National Association economist.

Credit unions are offering 10-year mortgages because of a changing market, said Steve Rick, CUNA senior economist.

"Some members prefer them over the 30-year mortgage, so [credit unions] are meeting the market demand," Rick said.

First Financial FCU, Wall, N.J., has begun offering a 10-year mortgage with rates as low as 2.5% and $599 closing costs.

"Shortening the term of your mortgage makes the single largest difference in the interest you pay, even more than a lower rate," said Alice Stevens, chief operating officer at First Financial FCU.

Greylock FCU, with $1.1 billion in assets, Pittsfield, Mass., offers a 10-year mortgage with an annual percentage rate as low as 3.75%, according to its website.

In September, Amoco FCU, a $589 million asset credit union based in Texas City, Texas, offered a 2.75% interest rate on 10-year mortgages (News Now Sept. 20).

CUNA's Rick noted other reasons credit unions offer 10-year mortgages:

  • Have less interest-rate risk when ¬†rates rise because more principal is amortized each month and therefore reprices at the higher interest rate;
  • Have less credit risk because loan balances are usually smaller and borrowers usually have better ability to repay; and
  • Have less liquidity risk due to the greater amortization of principal each month.
"A 10-year mortgage will have more interest rate risk compared to a four-year car loan or an adjustable rate credit card loan," Rick said. "But it will have less credit risk because of the secured nature of the loan."
RSS print
News Now LiveWire
#NewsNow: 21 CUs recieve more than $27M as part of CDFI Fund's FY2014 awards. http://t.co/2oZHLNqUTY
38 seconds ago
Read @CUNA 's #NewsNow on @TheNCUA 's McWatters' top action priorities: http://t.co/nyHEsWvvWm
29 minutes ago
Reg relief,transparency, accountability,supporting low-income CU members,promoting diversity R some priorities of @TheNCUA bd mmbr McWatters
51 minutes ago
.@CUANYtweets reminds NY #creditunions to submit stories for 2014 MORE Report
1 hours ago
New Calif law OKs e-filng of weekly deposit reports, eases #creditunion stressor See #NewsNow http://t.co/slhaUDNdYH
1 hours ago