Credit Unions' Use of the Secondary Market Increases

Credit unions continue to sell increasing portions of their home loans as interest rates fall to decade-lows. A new report by the National Association of Federal Credit Unions shows through the first six months of the year credit unions sold 49.1% of their mortgages, compared to just 32.3% in 2008, when mortgage rates were as much as 100 basis points higher. "Despite the fact that a vast majority of the responding credit unions currently consider interest rate risk as a bigger problem when compared to liquidity risk (92.7%), they hold a smaller average percentage of their loans granted this year in portfolio (50.9%) than they did in 2008 (67.7%)," said the NAFCU report. The increase in secondary market sales came after the federal government took both Fannie Mae and Freddie Mac under conservatorship last September, and as the average rate for 30-year, fixed-rate loans was plunging to 4.5%, the lowest in decades.