Loan rate ceiling for federal credit unions unchanged at 18%, until September 2021

Continuing a rate cap in place since 1987, the federal credit union (FCU) regulator on Thursday approved continuing the 18% loan interest-rate ceiling in effect for loans made by federal credit union loans for another 18 months on the unanimous vote of its three board members.

The cap has been set temporarily at 18% since 1987, with the NCUA Board voting for its continuation now 22 times since then.

The interest-rate ceiling for loans made by federal credit unions is governed by the Federal Credit Union Act. As amended in 1980, the act sets a ceiling of 15%, but the NCUA Board is authorized to raise it for up to 18 months if it consults with Congress, Treasury and other federal agencies after finding that (1) money market interest rates have risen over the preceding six-month period; and (2) the prevailing interest rate levels threaten the safety and soundness of individual credit unions as evidenced by adverse trends in liquidity, capital, earnings and growth.

Without the board’s action, the interest-rate cap for FCU loans would drop back to 15% by March 11. The temporary cap approved Thursday keeps the FCU loan interest-rate ceiling at 18% through Sept. 10, 2021.

Board memorandum

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