Jim McPheters, chief executive at California Coast Credit Union, has a tip for people in the subprime mortgage market.

These days, a trip to Fashion Valley Mall may not only net early spring deals, but also could be considered a patriotic gesture: go shopping, save the economy. With consumer spending accounting for more than 70 percent of the national economy, consumer confidence is the key to a 2008 rebound.

For credit unions, the economic downturn could be especially challenging. Many customers have tapped too deeply into home equity, subprime woes have caused problems with auto and credit card accounts and, until now, savings have been close to nonexistent.

But CUs still have two not-so-secret weapons going for them: demand for loans and cheap money. Two major rate cuts by the Federal Reserve in the last few months have brought some interest rates below 6 percent and observers aren’t ruling out more — perhaps a half percent cut followed by a quarter later in the year, that could bring rates as low as 5 percent.

Consumers who managed to keep their credit clean during the mortgage shakeout are in the driver’s seat. They’ll find themselves at an advantage with sellers of big-ticket items such as homes and cars, and are likely to be warmly greeted at their local CU office. Even customers with subprime mortgages won’t be turned away.

“People in the subprime mortgage market have an opportunity to bail out of those and get some financing at a lower rate,” says Jim McPheters, chief executive at California Coast Credit Union, a teacher-driven lender with about $900 million in shares and about 70,000 members. “This is perhaps at a fixed rate and if rates go down even an adjustable might not be too bad.” The credit union is offering a special home loan payment relief program, designed for lower income borrowers, and the rate on a 30-year fixed is about 6.12 percent.

McPheters says he recently talked to parents whose son is renting but has excess income. “They wanted to know what kind of mortgage he can afford, so I gave them a number and they said he might be able to get into a condo in Rancho Bernardo or some other place in San Diego that a year ago might be selling for $400,000 and now might be selling for $300,000,” he explains. “So it’s opening up a new market of opportunity for first-time home buyers or married couples that have not been able to afford something — prices are down and rates are down, so it’s a great combination.”

Ironically, it might not be a bad time to go into debt, especially since saving is less attractive. As the Fed lowers interest rates, savings accounts also draw less, though CUs typically cannot take down deposits to match the Fed; first, it’s against their mission, and CUs are in competition with 50 or so other financial institutions for consumer deposits.

“We cannot go in lockstep with what the Fed does because the marketplace in San Diego and what the competition does really determine what happens in San Diego,” McPheters says. “And this is a very competitive marketplace with a lot of financial institutions and a lot of good credit unions who are always trying to help the member any way we can — so the drop might not be as significant as elsewhere.”

California Coast’s loan demand has been fairly steady, McPheters says. “Demand for real estate loans has been very high — 40 to 50 applications came in the first week of February. The bulk of it is refi but there’s some purchase money involved too.”

The Arlington, Va.-based Navy Federal Credit Union is the nation’s largest CU with about $33 billion in assets; it has six branch locations in San Diego. Navy Federal is offering a 0.25 percent discount on New Fixed Equity Loans with automated payments and a home equity line of credit as low as 6.75 percent.

“The current market has not had a negative effect on our product offerings or the volume of members interested in obtaining our products and services,” says Keasha Lee, a Navy Federal marketing representative. “We continue to increase our deposits and numbers for consumer loans, savings and membership; in fact, we recently celebrated our 3 millionth member. Our mortgage portfolio is strong and our investment and insurance department had its best income month ever in January.”

Locally based USA Federal Credit Union, with about 60,000 members and more than $700 million in assets, wants to help members get the toys that Santa forgot with a “toy loan” promotion.

Eyeing loans on cars, boats, RVs, motorcycles or all-terrain vehicles, the CU is offering no payments for 90 days, says Marcus Armstrong, vice president of consumer lending. Auto loans can run as low as 5.99 percent, with RV and motorcycle rates as low as 7.74 percent. USA Federal is also offering $100 cash back at the time of loan funding.

For some, there’s gold in this economic silver lining.