NCUA Board Extends Loan Interest Rate Ceiling – CUToday.info

ALEXANDRIA, Va.―NCUA board approved the continuation of a temporary 18% interest rate ceiling for loans made by federal credit unions, the agency announced Friday.

The board action extends the temporary interest rate ceiling to Sept. 10, 2027.

The Federal Credit Union Act generally limits federal credit unions to a 15% interest rate ceiling on loans. However, the NCUA board may establish a temporary, higher rate for up to 18 months if it determines that money market interest rates have risen over the preceding six-month period and that the prevailing interest rate levels threaten the safety and soundness of individual credit unions, the agency explained.

NCUA added that staff analysis determined the statutory criteria have been met for the NCUA board to establish an interest rate ceiling exceeding 15%. Details of the staff analysis are available online. NCUA said the board will continue to monitor market rates and credit union financial conditions.

CU Trades React

The Defense Credit Union Council thanked the NCUA board for its decision.

“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—particularly servicemembers, veterans, and military families who often rely on affordable access to short-term and emergency credit,” stated DCUC Chief Advocacy Officer Jason Stverak. “As we outlined in the letter DCUC submitted to the board yesterday, most credit unions price loans well below the 18% 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 far more expensive non-bank alternatives.

“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,” continued Stverak. “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.”

America’s Credit Unions President and CEO Scott Simpson said 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. 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.”