Each year at this time, I take the opportunity to reflect on the past 12 months. Without a doubt, things have changed dramatically and we are operating in a completely different environment. Through these changes, we continue to be a safe and strong credit union able to serve our 46,00+ members around the world. I am thankful and proud of our incredible staff, outstanding members, and supportive volunteer Board of Directors and Supervisory Committee.
Our results for 2022 will be reported at our annual meeting in March and we are excited about our accomplishments in this very volatile environment. There continues to be many challenges ahead and the possibility of a recession in the eyes of many economists is high. Just as we have been successful in previous recessions and challenging markets, we are prepared for the future.
With inflation at its highest level in recent history, mortgage interest rates have more than doubled from approximately three percent to seven percent. I recently watched a business report that stated mortgage refinances have decreased 86 percent in the past year and there are less than 150,000 qualified borrowers in the United States that could benefit from a refinance. Similarly, with interest rates at current levels and increased housing prices over the last few years, purchasing a home is out of financial reach for some. In addition, those thinking about moving up are reluctant since they have to pay a higher price and have a new mortgage at more than twice the rate. Hence, the home buying has slowed dramatically. As an alternative, consumers are using home equity lines of credit (HELOCs) for home improvements, vacations, etc. as a source of funds.
Automobile purchases have seen similar scenarios. The shortage of inventory in new and used vehicles has driven up prices, and interest rates on automobile financing has also increased. The payment shock has made it difficult and similar to home buying, out of reach. In the second half of 2022, we have seen used car prices come down slightly as the overall car market stabilizes. However, new car sales which is traditionally 17-18 million annually remains at 12-14 million because of a lack of supply. This number should come back to more normal levels when supply chain issues subside hopefully in late 2023 or early 2024.
At Air Academy Federal Credit Union (AAFCU), we know there are many challenges due to rising costs/inflation. We have staff members that are Certified Financial Counselors ready to answer your questions on how AAFCU can help you improve your cash flow. Our staff can assist with budgeting, financial tips, and prepare your finances for the unexpected. In addition, we have a financial advisor that can guide you through retirement planning, investing for college, investing to create income, and your life insurance needs. With interest rates increasing, there are more alternatives that provide higher rates of return than in recent years. Please reach out to us. With 2023 here, now is the time to solidify your financial future.
When we look forward to 2023, we expect interest rates will increase but not at the rate of change in 2022. The Federal Reserve Bank will continue to increase rates to decrease the rate of inflation and the economic environment will continue to be challenging. We stand ready to help, advise, and guide your financial decisions so please use AAFCU as a resource. A highlight for all of us at AAFCU is when we help you and make a difference in your financial life.
None of the mission-driven work we do would be possible without an outstanding staff. We are proud to announce for the sixth consecutive year, we were named a Gazette Best Workplace—Large company. We have been recognized every year since the award was introduced and proof positive of our great culture. This is another proud AAFCU moment.
Thank you for allowing AAFCU to be part of your financial future and helping with your financial needs. I was chatting with a member the other day and they mentioned to me their son heard a presentation by AAFCU in high school. One of the topics was the importance of investing at a young age. He is now in his 40s and his financial trajectory was positively influenced by that presentation. Simply stated, we love when we improve the lives of our members. We will never forget we are a member-based financial institution dedicated to you. Our essence is Service to Others. If you need help during these volatile times, we will be there for you.
My hope for you is an outstanding 2023!
Glenn L. Strebe
CEO
