Nevada credit unions bucking trend

Mortgage originations at Nevada credit unions increased 11 percent last year, defying trends from most lending institutions during the national recession, the Nevada Credit Union League reported.

The double-digit growth in the number of fixed-rate first mortgages comes despite a slight decline in the third quarter, the latest period of data released by the organization that represents about 500,000 credit union members in Nevada.

Total mortgage lending remained steady as loan activity grew 2.3 percent during the quarter.

There are a couple of reasons behind the growth, said Daniel Penrod, industry analyst for Nevada Credit Union League. Not only do credit unions have more funds, they're willing to lend, he said.

"Our (lending) standards are the same as they were three years ago, five years ago, 10 years ago," Penrod said. "Credit unions didn't lower their standards during the boom to make more money. Because of that, they didn't open themselves up to the questionable exotic loans you saw from other institutions."

Credit unions reported a 16 percent drop in primary adjustable-rate mortgages, or ARMs, for the first three quarters, despite a gain of 20 percent in the third quarter.

Penrod expects ARMs to decrease this year as homeowners take advantage of lower fixed-rate options spurred by lower interest rates.

He said Nevada credit unions' portfolio of ARMs decreased because there's no incentive to do adjustable-rate loans when the spread, or difference, from a fixed rate is so small.

Overall, credit unions remain optimistic about growth in 2009, which will depend on whether government intervention drives down mortgage rates, Penrod said. A significant drop in interest rates could spur the refinancing market and attract new home buyers, he said.

Overall growth at financial institutions is likely to be "fairly muted" during 2009, Penrod said. Credit unions will continue to see increased lending activity.

"We have solid capital, conservative lending standards and the ability to meet increased demand for lending products of all types," he said.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.