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Banks compete with credit unions on consumer loan rates

The low interest rate environment has created increased pricing competition for popular consumer loan products. In some regards, banks and thrifts are at something of a disadvantage compared to credit unions, which can apply savings from their nonprofit status to lower interest rates for select loans. But SNL data on median average interest rates show that the pricing gap dissipates when it comes to mortgage loans, and experts say all institutions face a potential change in consumer demand when the Federal Reserve raises interest rates…

…The long-term duration of mortgages means the rate tends to follow movements in the 10-year Treasury note. The product has a national reach, despite its local delivery, and many of the money center banks have a share of the U.S. mortgage market that exceeds their deposit share, said Lee Kyriacou, managing director at financial services consulting firm Novantas. The interest rate is “the single number” that matters most to consumers when getting a mortgage, and larger players have scale that allows them to offer competitive prices.

Read the full article at SNL…

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