2020 was a big year for loans because of the record low mortgage rates, and 2021 seems to be going in a similar direction. According to an article published in CNBC.com, research has shown that credit unions tend to give out more loans compared to big commercial banks during a financial crisis. This is because they have a different agenda, compared to big banks. Credit unions want to “Main Street” which consists of unions and local communities.
According to information from the Credit Union Nation Association, credit unions were lending (even at higher rates) during the Great Recession and also during the current crisis brought on by the pandemic. If you look at data from big banks, they usually shy away from lending during crises.
Between the end of 2019 and September of 2020, credit union memberships went up by 3.37 million and loan portfolios at credit unions went up by 6.6% between September of 2019 and September of 2020.
There is a reason for all of this. Credit unions are not-for-profit organizations, so their profits/gains are “returned” to their members by giving lower rate loans. We should state that during what you might call a “normal” time, as in when the economy is booming, big banks do give out more loans, but that’s likely because they are for-profit institutions and are aware of the financial benefits of lending during an economic boom cycle.
Jordan Van Rijn, senior economist at the Credit Union National Association stated, “Compared to for-profit institutions, [credit unions] tend to not sort of be as caught up in the boom-bust cycle of ups and downs.”
It’s up to you as a buyer to decide what kind of loan you want to apply for and what kind of institution you choose to work with, when it comes to YOUR loan and YOUR money. However, we do think it’s important to remain current on the industry happenings and information and to know about every resource available to you. Don’t shy away from considering a credit union loan, and don’t hesitate to talk to us about your options. Amin Vali Real Estate Investment strives to work WITH you and what makes you comfortable and what the best option is for you as an individual so feel free to lean on us for information and resources as you embark on the great journey of owning real estate.