ALEXANDRIA, Va.–By a 3-0 vote, the NCUA board has approved an 18-month temporary extension of the 18% interest rate ceiling for federal credit unions, with staff noting more than a thousand CUs would take a financial hit if it were lowered.
The temporary ceiling will run through March 10, 2026.
The 18% ceiling, which would have expired on Sept. 10, has been in place since May of 1987. The Federal Credit Union Act sets the ceiling at 15%, which requires the board to approve the 18-month extensions providing certain criteria are met, as outlined below.
According to NCUA staff, a return to % ceiling would have an adverse affect on approximately 1,139 CUs, as chart below illustrates.
“A reduction in average loan interest rates to 15% could lead to as much as $873 million of lost future annual interest income,” staff told the board. “For those federal credit unions the adverse impact would be particularly pronounced for 273 federal credit unions that are already struggling with negative earning, for the 37 federal credit unions with low net worth ratios and for the 49 credit unions with greater than 10% of their assets and loans with rates greater than 50%.”
Agency staff presenting to the board said there are numerous considerations for keeping the ceiling at 18%, as outlined below.