Lending, membership gains lead October MCUEs
Credit union loans outstanding grew 0.9% in October, following a 0.8% increase in September. Total credit union memberships grew 0.2% during the month--a 3.9% increase from October last year--to 108.6 million.
Savings balances declined marginally by 0.1%--practically unchanged in October from September, but up 7.1% from a year ago.
“Given strong October estimates, my sense is data for the remaining two months of the year will be equally strong or better than October,” said Perc Pineda, CUNA senior economist. “The monthly numbers this year altogether are in line with our forecast of strong credit union operations in 2016.”
Pineda said a highlight for the month was a significant increase in home equity lending to 3.4% in October from 0.3% in September, which could be explained by a stabilization of home prices in recent months.
“The slight pullback in new single-family home sales in October from September by 1.9% appears to be reflected in the 0.7% decline in fixed-mortgage lending in October at credit unions,” Pineda said. “However, year over year, fixed mortgage lending at credit unions rose 7.1%. Adjustable mortgage lending increased 1.7% in October. Healthy mortgage lending at credit unions is in sync with a housing market in recovery mode.”
Pineda said he expects mortgage refinance opportunities to diminish as mortgage rates continue to rise. However, mortgage rates are still low by historical standards and are not expected to drastically increase in the near term.
“Housing affordability is still low,” he said. “Hence, the homeownership rate currently at 63.4% will continue to increase--given stable housing demand.”
Regarding the overall economic picture, the 10-year Treasury yield has stayed above 2% since the November presidential election and will most likely continue rising, Pineda said. “It should be noted that the 10-year Treasury yield was above 2% until January this year,” he said. “It’s moving back to the previous higher level. This means mortgage rates will increase.”