Credit union lending continued its impressive growth in January, according to CUNA’s Monthly Credit Union Estimates.
Credit union loans outstanding grew 0.9% in January. Since May loans have increased at least 0.8% each month.
“By in large, credit unions are off to a good start: 2017 could be similarly strong as 2016 for credit unions,” said CUNA Senior Economist Perc Pineda.
Adjustable-rate mortgages led January loan growth, rising 3.8%, followed by new auto loans (1.4%), used auto loans (1.2%), home equity loans (1.1%), other mortgage loans (0.7%), and unsecured personal loans (0.6%). On the decline during the month were credit card loans (-1.0%) and fixed-rate first mortgages (-0.4%).
“The increase in adjustable rate mortgage lending is consistent with an environment of rising interest rates,” Pineda said.
Credit union savings balances declined 0.5% in January, compared with a 1.3% increase in December. One-year certificates led savings growth, rising 0.9%. On the decline during the month were share drafts (2.7%), regular shares (0.9%), individual retirement accounts (0.4%), and money market accounts (0.2%).
Pineda attributed the drop in savings to seasonal factors as credit union members paid off holiday credit card debt.
Total credit union memberships grew 0.3% during January to 110 million.
The loan-to-savings ratio increased from 80% in December to 81.2% in January. The liquidity ratio (the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities) decreased to 15.3% in January from 15.4% in December.
The movement’s overall capital-to-asset ratio remained at 10.6% during January. The total dollar amount of capital increased 0.9% to $141.3 billion.
CUNA economists are anticipating that the Federal Open Market Committee will raise the federal funds rate 3 times this year. “Nevertheless, I expect the interest rate environment to change gradually this year,” Pineda said. “Bear in mind that the housing market hasn’t fully recovered. Housing demand will stay strong as unemployment drops further and household earnings improve. We can expect continued healthy mortgage lending at credit unions this year.”