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News Now

Washington
Federal CU rate set for 18 months
ALEXANDRIA, Va. (1/25/08)--The National Credit Union Administration (NCUA) voted Thursday to continue the 18% interest rate ceiling for loans and lines of credit advances made by federal credit unions. The ceiling is set for an 18-month period from March 10 through Sept. 10, 2009.
Click for slide show[CLICK TO VIEW SLIDESHOW] On the agency’s interest rate ceiling, NCUA Director of the Office of Capital Markets and Planning J. Owen Cole Jr. (right) recommended the board leave the permissible maximum interest rate for federal credit unions at 18% for the next 18 months. As part the agency’s analysis of the rate, it solicits input from Congress and the U.S. Treasury. “We received no specific feed and view that to mean they’re comfortable with our economic rationale and justification,” he said. (Photo provided by CUNA)
The agency will issue a Letter to Federal Credit Unions to notify those institutions of the rate decision. The current 18% ceiling was due to revert to 15% on March 10 absent NCUA’s action. As required by Congress, the NCUA will review this rule again in 18 months or sooner if economic conditions warrant. Prior to the vote, the board emphasized the benefits of a higher interest rate ceiling to credit union members and their communities. A higher rate can enable credit unions to provide affordable capital through risk-based lending, according to agency staff.


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