Karl A. Kozak is president and CEO of Pawtucket Credit Union, which serves Rhode Island and southeastern Massachusetts. Interest rates, despite the downgrade to U.S. debt by Standard & Poor’s over the summer, have remained low, keeping financial institutions busy.
PBN: The average rate for a 30-year, fixed-rate mortgage has been under 4 percent for the last nine consecutive weeks, and only twice this year has it been greater than 5 percent. Have the rates you’ve offered reflect this?
KOZAK: There are many factors that affect the rate that an institution offers, such as points and closing costs. PCU’s rate on a 30-year, fixed-rate mortgage, as well as our other products, has remained competitive in an uncertain economic environment.
PBN: How has this affected your residential business?
KOZAK: PCU has experienced an increase in refinance versus purchase transactions due to current conditions in the residential mortgage marketplace. Today’s historic low rates have afforded many of our members the opportunity to significantly reduce their monthly housing expense and long-term debt. Seeking solutions that best fit an individual’s or family’s needs remains a top priority.
PBN: How has PCU dealt with refinancing?
KOZAK: We anticipate continued promotion of our Spectrum Home Loans, which enable homeowners to refinance their mortgage and reduce their rate to 3.5 percent with our 5/5 product or 3.75 percent with our fixed-rate product.
PBN: How has the low interest rate environment affected your commercial business?
KOZAK: The current low-rate environment has affected commercial business much the same as residential, although there are additional factors to consider on the commercial side due to the nature of the loans.
PBN: What do you expect for next year? Will rates go up or down? Will your residential or commercial business increase?
KOZAK: Everything will depend upon economic conditions, job creation, etc. The Federal Reserve’s actions are intended to keep the economy growing. As long as the economy continues to improve, we’ll see mortgage rates remain at their current levels for a while or trend slightly higher for the foreseeable future. So, yes, I expect growth in both our residential and business loan portfolios.