News & Insights

Halloween brings incantations of ghastly displays and haunting celebrations; similarly, financial markets seem to be concocting a brew of transformation. The recent slashes to interest rates have brought significant changes for credit unions, especially with regard to their assets and liabilities.

Mortgage-backed securities (MBS) often offer higher yields compared to other investment types, making them an attractive investment for credit unions seeking to enhance their income. The higher yields from MBS can help credit unions meet their income requirements and improve their financial performance. However, the benefits of MBS come with associated risks that must be carefully managed.

Since the Fed began increasing the fed funds rate 11 months ago, credit unions across the country have been heavily impacted by the rapid ascent of interest rates. Credit unions experienced some benefits to the rise in rates, but challenges emerged as well. Therefore, it is no surprise that interest rate risk (IRR) tops the list of NCUA’s 2023 Supervisory Priorities.