As announced last Friday, the National Credit Union Administration approved the continuation of a temporary 18-percent interest rate ceiling for loans made by federal credit unions. And the credit union movement has been showing its appreciation for the decision.
This included a statement from Scott Simpson, President and CEO, America’s Credit Unions.
“Maintaining the NCUA’s 18% interest rate ceiling is about preserving access to responsible, affordable credit for consumers. As a result, credit unions are able to serve borrowers who would otherwise be pushed into far more expensive and less regulated alternatives,” said Simpson.
He continued, “The NCUA has maintained this ceiling for decades, recognizing that allowing the cap to revert back to 15% would not lower costs for consumers. Rather, it would restrict access to credit, particularly for working families who rely on credit unions for safe, fairly priced loans. The NCUA’s authority to maintain the 18% ceiling provides stability, protects consumers, and ensures credit unions can continue fulfilling their mission as financial cooperatives that serve people, not profits.”
The Defense Credit Union Council (DCUC) also weighed in. DCUC Chief Advocacy Officer Jason Stverak noted that “allowing the loan interest rate ceiling to revert to the statutory 15% would significantly restrict credit availability.”
“This action reflects a clear understanding of today’s interest-rate environment and the importance of preserving credit unions’ ability to safely and responsibly meet the credit needs of their members. Most credit unions price loans well below the 18-percent ceiling; however, retaining this flexibility is critical to ensuring credit unions can continue serving higher-risk and underserved borrowers without compromising safety and soundness or pushing members toward predatory lenders and less regulated alternatives,” said Stverak.
Stverak added, “We appreciate the Board’s careful review of market conditions and its continued commitment to a regulatory framework that balances prudential oversight with the operational flexibility credit unions need to fulfill their mission. DCUC looks forward to continuing our constructive engagement with the NCUA on policies that strengthen the credit union system and protect the members we collectively serve.”
The Board action extends the temporary interest rate ceiling to September 10, 2027.