Credit union loan balances rise again

Credit unions continued their pattern of strong loan growth in September, but CUNA chief economist Mike Schenk said Monday that growth will fade as the Fed continues to raise interest rates. interest.

“This strong loan growth will decline as we move forward,” Schenk said.

CUNA Credit union monthly estimates released on Friday showed credit unions made big gains in all major areas except first mortgages. Total loan balances increased 19.6% to $1.5 trillion from a year earlier and 2.1% from a month earlier, compared to an average gain of 0.9% in september.

Schenk said the report showed the same large gains in loan balances compared to previous months this year.

The 2.1% gain from August to September marked the third straight month with monthly gains above 2%.

“Looking back 30 years, there’s never been a calendar year where we’ve had three months of loan growth this quickly. It’s pretty amazing,” Schenk said.

Mike Schenk

Car credit remains one of the main areas of growth.

New auto loans rose 22.7% to $176.6 billion from a year earlier and 3% from the previous month, compared with an average gain of 1% in September.

Used car loans rose 19% to $309.9 billion from a year earlier and 2.1% from a month earlier, compared to an average gain of 0.8% in September .

The Fed’s G-19 consumer credit report released Monday showed credit unions increased their share of the nation’s total auto loan balance. Credit unions held a record 34.8% share as of September 30, down from 33.3% in June and 31.1% in September 2021.

Credit unions’ share was only about 25% in 2015. It peaked at 32.6% at the end of 2018 and fell to a low of 30.1% in June 2021 before declining. set new records in June and September of this year.

The G-19 also showed that credit unions have increased their share of credit card debt.

Credit unions held $70.3 billion in credit card balances as of Sept. 30, up 14% from a year earlier and 0.7% from August, versus an average gain of 0 .3% in September.

Credit unions’ share was 6.3% in September, compared to 6.2% in August and 6.3% in September 2021.

Banks held $1.02 trillion in credit card debt as of September 30, up 16.8% from a year earlier and 0.4% from August. Banks’ share was 91.0% in September, unchanged from August and up from 90.2% in September 2021.

However, real estate is suffering.

The Mortgage Bankers Association estimated third-quarter first mortgage originations at $480 billion, down 55% from a year earlier. It predicts fourth-quarter creations will fall 59% to $410 billion.

Among top 10 credit unions By asset, residential real estate loan originations were $11.8 billion in the third quarter, down 33% from $17.6 billion a year earlier and $15.4 billion last year. second trimester.

On the balance sheet, CUNA estimated that all credit unions held $549.4 billion in first mortgages, down 2% from a year earlier and up 1% from a month earlier, versus a gain average of 1.1% in September.

Second mortgages were up 17.8% to $100.3 billion from a year earlier and 3.6% from a month earlier, compared to an average gain of 0.2% in september.

While loans have grown rapidly, savings have lagged. Savings were $1.9 billion as of September 30, up 6.6% from a year earlier and 0.7% from the previous month.

“And what all of that means is that the loan-to-equity ratio is going up and has gone up quite steeply,” Schenk said.

The loan/unit ratio was 79.0% as of September 30, compared to 77.9% a month earlier and 70.4% in September 2021.

“That compares to a pre-pandemic reading of 71%, which is pretty close to the long-term average of 73%,” Schenk said. “What that means is that there’s not a lot of liquidity, or liquidity has tightened very significantly over the course of the year and that was certainly the case in the month of September. “

Schenk pointed to loan quality and membership growth as two of the brightest trends seen in his September report.

Credit unions had 136.1 million members as of Sept. 30, up 3.8% from a year earlier, which Schenk said was “incredible” compared to annual U.S. population growth. by about 0.5%.

The 60-plus-day delinquency rate was 0.49% on September 30, up from an all-time low of 0.42% on March 31 and about half the long-term average delinquency rate of 0. .96%.

“Crime remained stable near an all-time low,” Schenk said.