Mortgage lending by credit unions up 15% last quarter (2024)

FAQs

Do credit unions have competitive mortgage rates? ›

Lower Mortgage Rates

While costs will always vary between institutions, when it comes to mortgage loan rates, credit unions often have much better rates.

Credit unions tend to have lower interest rates for loans and lower fees. Banks often have more branches and ATMs nationwide. Many credit unions have shared branches and surcharge-free ATMs provided through the CO-OP Shared Branch network.

Just like a typical bank, a credit union offers all products, from car loans to mortgages. However, they offer lower interest rates on loans because of a customer-centric model. They are not focused on generating profits for shareholders and are primarily aimed at creating value for their members.

Credit union profits go back to members, who are shareholders. This enables credit unions to charge lower interest rates on loans, including mortgages, and pay higher yields on savings products, such as share certificates (the credit union equivalent of certificates of deposit).

Credit unions generally offer more competitive mortgage rates compared to traditional banks. In the final quarter of 2023, the average rate on a 30-year fixed-rate mortgage offered by credit unions was 6.96 compared to 7.10 for traditional banks, according to National Credit Union Administration data.

Better Interest Rates

Because credit unions are non-profit and member-owned, they can pass down the savings to their members. One of the ways that borrowers benefit from this cost structure is through lower interest rates.

ATMs and Branches Might Not Be Convenient

If you're considering a credit union that's on the smaller side, it might have a limited number of locations in your community. Finding time to visit the branch can be difficult, especially since some credit unions don't have the most flexible hours.

By focusing on returning value to the membership, credit unions are able to offer rates that beat those of traditional banks. Plus, members typically have access to: More flexible lending decisions than traditional banks.

Credit Union Pros and Cons. The pros of credit unions include better interest rates than banks, while the cons include fewer branches and ATMs.

Much like with an initial mortgage, lenders are often open to negotiations to secure your business. Having quotes from multiple lenders enables you to negotiate a more favorable refinance rate. Can banks offer better mortgage rates? Yes, banks and credit unions can offer better mortgage rates.

Do credit unions have higher loan rates? ›

On average, credit unions offer higher saving rates and lower loan rates. This could help group your savings grow faster and your loan will cost less. Credit unions also tend to charge lower fees, require lower deposit balances and offer better service.

Choosing between a bank and a credit union may involve some tradeoffs on interest rates, technology and tools, and ATMs and branches. Interest rates: On average, credit unions tend to offer higher rates on deposits and lower rates on loans.

The downside of credit unions include: the eligibility requirements for membership and the payment of a member fee, fewer products and services and limited branches and ATM's. If the benefits outweigh the downsides, then joining a credit union might be the right thing for you.

Just like banks, credit unions are federally insured; however, credit unions are not insured by the Federal Deposit Insurance Corporation (FDIC).

Why Credit Unions May Be Your Best Bet. While shopping around and negotiating can certainly help you get a lower rate, there's a compelling case to be made for starting (and likely ending) your search with a local credit union.

Eligibility requirements for personal loans from credit unions are less strict than a bank's criteria. In particular, a low credit score may not disqualify you from a loan with a credit union, because a credit union is more likely to take into account your overall financial circ*mstances.