Generating Interest: A Study of the Credit Union Mortgage Penetration Problem

What if I told you there’s a group of mortgage lenders with a built-in reach that touches nearly half of Americans?^[1] And that same group of lenders offers persistently lower rates?^[2] And on top of that, this same group of lenders routinely outscores competitors when it comes to customer satisfaction and experience?.^[3]

You’d probably say this group of mortgage lenders has an unfair advantage, right? One that gives them an inherent right to win a dominant share of the mortgage market.

I’ll let you in on a little secret: if you’re reading on ACUMA, you’re probably part of that group of lenders. The truth is credit unions and their mortgage teams have spent years building expansive relationships and networks that have earned them the trust of nearly 145 million members; however, despite the reach and differentiated product experience, when it comes to mortgage growth, we often discover a divergence between inherent credit union advantages and the mortgage penetration rates among members.

With an average mortgage penetration rate hovering around 2-4%^[4], the logical conclusion is that members fall into one or more of the below categories:

• They are simply unaware that their trusted credit union is an option for their home loan.
• They are being successfully intercepted by competitors who reach them first.
• They separate everyday banking from homebuying, failing to connect their primary financial relationship with their mortgage decision.

Regardless of which category your members fall into, the mandate for credit union mortgage teams can be simplified into one challenge: leveraging existing trust to better anticipate member homeownership needs so your credit union is always first in line for their next home loan.

Lost Interest

One of the greatest misconceptions is that rates are the main vector through which homeowners choose a lender. While this may sound logical in theory, actual consumer behavior tells a different story. Research from McKinsey & Company found that the average borrower contacts 1.7 lenders during their home buying process, with over half contacting just one lender.^[5] This suggests that most homeowners effectively assume rates are a commoditized layer and are optimizing for speed, ease of access, and trust.

There are two layers to peel back when it comes to this understanding of the role that rates play in the member psyche. The first is that while mortgage rates in a broad sense have converged as the role that the GSEs play in the mortgage market continues to grow in influence, the full truth is that the data shows credit unions still carry the best mortgage rates, both when it comes to conforming products and portfolio products.² The rate advantage matters less as a transaction trigger, as members rarely shop with multiple lenders, but more as a reason credit unions deserve to be the first call, only if members know to make it.

Amongst conforming products, credit union rates are on average +24 bps versus banks, and this spread is likely to widen even further against IMBs, given the Federal Reserve Bank of Kansas City notes that bank rates are on average lower than those of IMBs.^[6] When comparing against credit union portfolio products, the spread reaches +108 bps for one-year portfolio ARMs, +68 bps for closed-end home equity loans, and +61 bps for HELOCs.² The spread has been widening during the recent run-up in interest rates, meaning the role that credit unions have been playing in finding opportunities to pass along savings to prospective homeowners has widened.

The spread has only widened as rates climbed, meaning credit unions have become more competitive precisely when affordability pressure has made every basis point count. Good news, right? However, it appears that this messaging isn’t reaching members at the time that they are making their decision. Looking at this data, the solution becomes clear that credit unions must activate their member base before a transaction occurs so that they become one of the first places a member thinks about when it comes to mortgage lending. If the data shows that homebuyers only turn to one or two lenders, pre-activation and engagement prior to a transaction become ever more relevant. Understanding where a current and future homebuyer is in their journey becomes increasingly important, so that the rate advantage can turn into meaningful wins that show up on the mortgage penetration scoreboard.

Competitive Interceptions

If credit unions hold the rate advantage, let’s take a look at what other lenders are doing to compete in this increasingly competitive mortgage market. When looking at the broader landscape, the group of lenders that have dramatically increased market share over the past decade are the IMBs.^[7] Despite what one could argue is a cost of capital disadvantage (especially compared to depository financial institutions like banks and credit unions), IMBs have been able to grow their mortgage pipeline by investing in strategies that reach consumers prior to a transaction to ensure that their brand and products are top of mind when it comes to an eventual transaction.

IMBs have successfully executed a playbook of buying their way into the relationship equation. By providing value to prospective homeowners before a transaction, IMBs have found creative ways to insert themselves into the trust equation, equating their brand with financial management and homeownership.

• Rocket’s acquisition of Truebill (now Rocket Money) for $1.3 billion represented an intentional shift to increase engagement amongst homeowners.^[8] Recognizing that mortgage lenders typically engage with homeowners every 5 to 7 years, Rocket realized that by inserting themselves into the financial management process, they can get an understanding of where the consumer sits in their homeownership journey, and based on activity, understand when to deliver the right message at the right time about the role that Rocket plays in the homeownership journey.
• The growth of Zillow Home Loans is an example of how engagement before a transaction can lead to explosive lending growth. Zillow has operated as the front door for home discovery. Leveraging the search traffic on their website, Zillow has been able to analyze intent and funnel those insights into a mortgage pipeline that has exploded in recent years.^[9]
• The most recent manifestation of this strategy is UWM’s partnership with Bilt Rewards, a member loyalty rewards program for renters and homeowners. One of the unique aspects of this partnership is the direct pipeline it gives UWM into a growing network of renters with potential to become homeowners. Bilt has amassed a network of millions of renters, and by inserting themselves into this network, UWM has positioned itself to intercept future homeowners before they enter the broader market.^[10]

The net of these examples shows that IMBs have been searching for strategic ways to grow the relationships they have with homeowners, realizing that if you are waiting to reach out when a homeowner is ready to transact, you may already be too late.

Not only are these organizations finding ways to establish relationships with consumers before a mortgage transaction, with each interaction they’re turning to data to analyze signals and ensure their message reaches homeowners at the right time. Whether that’s understanding checking account balance movement, monitoring search intention, or tracking current renters with high potential for homeownership, each engagement represents a new data point that is ultimately being tracked and analyzed into a comprehensive data engine.

The great news for credit union mortgage teams is that they don’t have to spend to “buy” trust and discover new relationships. With 145 million members and counting, the credit union relationship network is vast. However, what we can learn is the necessity to utilize systems that allow us to manage these relationships. With vast member networks, the ability to understand what’s going on in every member’s life is one that can be accomplished with the right tools in place. The problem of managing expansive data networks is a challenge, but it’s a core imperative to remain relevant in this increasingly competitive mortgage landscape. Activating the latent data in these trusted relationships may hold the key to allowing credit union mortgage teams to reach homeowners at the right time, with offers that benefit their members pursuing the dream of homeownership.

The Path Forward

The self-evident truth is the mortgage battle is often won long before an application is ever submitted. It is for this reason that the challenge for credit union mortgage teams must become how to transform from reactive intake to proactive discovery. Doing so doesn’t require multi-million-dollar marketing budgets or expensive acquisitions to buy relationships; it requires a framework shift to apply modern technology built upon data intelligence to better understand member needs. Understanding member needs today means synthesizing life event monitoring, product compatibility, and member touchpoints into actionable insights.

When credit unions pair their structural rate advantage with this level of proactive visibility, the penetration gap will close naturally. The combination of cost-savings opportunities coupled with enhanced service means that a proactive message will help credit union mortgage teams enter the conversation at the right moment as members begin their homebuying journey.

^[1] America’s Credit Unions / NCUA: National Credit Union Membership Data & System Statistics, 2024–2025. Total U.S. credit union membership reached 140+ million members, representing roughly half of the adult U.S. population.

^[2] Datatrac National Rate Index: Comparative Mortgage Rate Benchmarks. Tracking historical interest rate spreads across conforming and portfolio mortgage products between credit unions, commercial banks, and IMBs.

^[3] American Customer Satisfaction Index (ACSI): Annual Finance, Banking, and Insurance Study. Credit unions consistently lead retail banks and non-bank mortgage lenders in overall customer satisfaction and trust metrics.

^[4] Callahan & Associates / NCUA Call Report Analysis: Credit Union Mortgage Penetration Benchmarks. Industry average for first-mortgage relationship penetration across total active credit union membership sits between 2% and 4%.

^[5] McKinsey & Company: Making Sense of the Mortgage Market & Growth Strategies for the Purchase-Mortgage Market. Behavioral study indicating the average borrower contacts 1.7 lenders, with over 50% only contacting a single lender

^[6] Federal Reserve Bank of Kansas City: Economic Research & Banking Studies. Research highlighting interest rate spreads and pricing premium differences between depository institutions (banks/credit unions) and non-depository IMBs.

^[7] Mortgage Bankers Association (MBA): Independent Mortgage Banks Fact Sheet (2025). According to Home Mortgage Disclosure Act (HMDA) data, IMBs have grown their share of overall origination volume from 24% in 2008 to 68% in 2024.

^[8] Rocket Companies, Inc.: SEC Form 8-K & Press Releases, “Rocket Companies Completes Acquisition of Truebill” ($1.275B cash transaction to drive pre-application consumer engagement).

^[9] Zillow Group, Inc.: Annual Report (Form 10-K), detailing Zillow Home Loans funnel growth and monetization of pre-transaction search intent traffic.

^[10] United Wholesale Mortgage (UWM): Corporate Announcements & Partnership Filings, partnership with Bilt Rewards to access renter loyalty network pipelines prior to market entry.

The information reported in this document, financial and otherwise, should not be construed as either legal or investment advice, nor does it represent the views of ACUMA, its Board of Directors, its staff or its members. The author presents information current at the time of publication and is designed to educate ACUMA members and others interested in the credit union mortgage lending industry.