Mitigating Potential Losses from Fixed Interest Rate Loans

 

As the economy and job market continue to improve, NCUA regulators are increasingly concerned about potential rises in inflation and possible negative returns on fixed asset rate loans for credit unions. A better job market can also mean rising interest rates, which is also not good news for credit unions holding a large number of fixed interest rate loans. If your regulators are concerned about it, it’s probably a good idea for your credit union to be concerned about it.

 

What can your credit union due to help mitigate potential losses from fixed interest rate loans? An initial thought is that many credit unions tend to carry large numbers of auto loans on their books with very small margins. This is problematic. Increasing the member business loan side of the lending .... more

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