April 23 - The Federal Home Loan Banks marketing of advances has been very successful in recent years. CUs, who are a target of these marketing programs and are using the funds to finance mortgages, could expose themselves to substantially higher interest rate risk. April 16 - Spreads have widened on whole loan mortgage securities, particularly on issues which are prohibited to credit unions. The temptation of high yields, however, is certainly present. April 9 - Many CUs continue to obtain below market yields on CDs.
Several factors seem to be at work.
First, many CUs fail to compare rates on a bond equivalent basis. Since brokers frequently quote CDs in higher simple interest terms, it makes CDs look better than other opportunities. Second, CUs let the broker place the CD at the broker's safekeeper. Arrangements between the broker and the safekeeper often ensure a portion of the interest on the CD is remitted directly to the broker, without the knowledge of the credit union. CUs can often obtain better rates by purchasing CDs directly from the issuer.