Collective junior lien holdings on the balance sheets of the nation’s credit unions expanded by 39 percent last year.
One-to-four family residential loans secured by junior liens that were on the balance sheet of the 4,760 federally insured U.S. credit unions totaled $105.3 billion as of Dec. 31, according to the National Credit Union Administration’s Quarterly Data Summary Report for the fourth-quarter 2022.
Junior-lien holdings expanded from $97.4 billion in the third quarter. The growth was even more significant compared to the fourth-quarter 2021, when junior-lien assets stood at just $75.6 billion.
The NCUA reported that junior liens accounted for just under 5 percent of the $2.168 trillion in total assets as of the final quarter of last year.
Although credit unions’ total deposits declined to $1.850 trillion in the latest report from $1.860 trillion three months earlier, deposits have grown from $1.789 trillion at the end of 2021.
“As rates increase in the current economic environment, so does the associated risk that makes short-term liquidity events possible,” NCUA Chairman Todd M. Harper said in the report. “The potential for sudden changes in either inflation, the rate environment, or the economy means that credit unions must remain nimble in the months ahead.”