By Nicholas Ballasy July 22, 2014
LAS VEGAS – Credit union executives said Tuesday their institutions are making changes in preparation for a potential interest rate increase.
“We’re trying to stay shorter and shorter. Interest rates have nowhere to go but up so we’re holding everything pretty short so that when the rates do change, we can get into the longer term loans with better rates to match where they’re headed,” said Richard Smith, chairman of the board at the $376 million ProFed Credit Union in Fort Wayne, Ind., at NAFCU’s annual conference.
ProFed has also been selling off long term mortgage loans as another way to prepare for rising interest rates, he said.
“We’re selling those off and Freddie Mac is buying a lot of those. They are paying about 102% on those upfront so we’re staying short that way,” he said. “We’re still helping the members out when they come in wanting a mortgage, 15 or 30 years. We’re still doing the servicing so they feel like it’s still with us but at the same time we’ve gotten it off the books.”
CU Times asked Smith if his credit union decided to sell off long-term assets due to recommendations from its examiner.
“We started doing that on our own. The lead examiner-
Continued > >>Credit Unions Preparing for Rising Rates: Onsite Coverage
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