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More members turn to credit unions for mortgages and auto loans

Credit unions are seeing growth both in mortgage loans and auto loans.

Credit unions are seeing more of their members turn to them for loans, according to a study by TransUnion. The data focused on two types of loans: mortgages and auto loans, both of which showed growth in the first few months of 2015.

After a decrease in mortgage lending across the market from 2012 to 2014, credit unions have experienced a bigger comeback than their competitors. Credit unions saw 35 percent growth in loan origination, while their competitors only generated 15 percent more loans. Credit unions now have 11 percent of the market's mortgage loan origination, an increase of 4 percentage points since the first quarter of 2013.

"In the last year alone, it appears significantly more credit union executives are seeing growth in this area," Director of Research and Consulting in TransUnion's financial services business unit Nidhi Verma​ said in a press release. "Credit unions are becoming bigger players in the mortgage loan market, something that may serve them well in the future as the housing market continues to recover."

"Credit unions have 11 percent of the market's mortgage origination."

TransUnion also looked into how the the financial crisis affected people then and how they are doing now. The study estimates that 18 percent of mortgagors affected have recovered as of December 2014, according to Fannie Mae's Selling Guidelines. The study indicated that over the next six years, as more people recover, the opportunities for mortgage loans will go up.

The improvement of the housing market isn't the only thing that's bringing up credit unions' share of mortgage loan origination. Many credit unions across the country have been focusing on letting their members know what is available in terms of mortgage loans. For instance, David Brydun, the vice president of consumer lending at Baxter Credit Union in Illinois, told the Credit Union Times that his credit union began to directly market mortgage loans to customers most likely to need and qualify for one. Meanwhile, Chief Lending Officer Stephanie Zuleger of Y-12 Federal Credit Union in Tennessee explained that she made sure her credit union offered a wide range of loan options.

Auto Loans
At the same time, auto loans from credit unions have increased 7.4 since the first quarter of 2014, passing up the rest of the industry, which only grew 2.1 percent. In addition to an influx of auto loans, the loans themselves have been getting longer, with 47 percent of auto loans agreed upon to last 60 or more months. Five years ago, that number was only 32 percent.

"In the current low interest rate environment, longer loan durations allow consumers to buy new or used cars with lower monthly payments that fit within their budget," Verma explained. "The increase in loan durations shows lenders are meeting those consumer needs."

TransUnion's study showed that credit union executives view auto loans as the area that holds the most promise for them in the upcoming year. Mortgage loans and credit cards are also seen as areas of opportunity.

The loan practices displayed by credit unions reflect on their history of being member-focused. These trends suggest that credit union membership and lending will only grow in the years to come.