January 27, 2023

NCUA votes to maintain interest rate ceiling at 18%

NCUAThe NCUA Board held its first meeting of the year yesterday and unanimously approved maintaining the current temporary 18 percent interest rate ceiling for loans made by federal credit unions (FCUs) for a new 18-month period. The extension begins after the current period expires March 10. The NCUA Board has consistently maintained the interest rate ceiling at 18 percent for decades by extending the expiration date.

NAFCU urged the NCUA to make adjustments that will mitigate FCUs’ interest-rate-related risks and enable FCUs to better serve their communities ahead of the meeting, including by immediately raising the ceiling to 21 percent. NAFCU has consistently advocated for a floating permissible interest rate ceiling to address constraints of the 15 percent ceiling set by the FCU Act.

During the meeting, NCUA Chairman Todd Harper noted that the floating interest rate ceiling is an interesting point and that the NCUA should complete its analysis by the April Board meeting. Board Member Rodney Hood quoted NAFCU’s letter when expressing concerns about maintaining the rate at 18 percent.

Additionally, the agency unanimously approved its 2023 Annual Performance Plan. While the NCUA’s strategic and performance goals are mostly the same as last year, the plan provides more specifics regarding the metrics the agency will use to track its efforts.

NAFCU will continue to engage the NCUA, including reiterating the need to establish a floating permissible interest rate ceiling.