Lending growth highlighted CUNA’s May Monthly Credit Union Estimates as the beneficial effects of recent U.S. labor market improvement were reflected in gains in consumer spending and borrowing, according to CUNA economists.
CUNA’s report reveals credit union loans grew by 1.2% in May--a 14.4% annualized pace and the fastest monthly increase since June 2016. On a year-over-year basis, loan balances are up 10.9%--a bit faster than the full-year 2016 result.
“Auto lending fueled the increases--an impressive development,” said Mike Schenk, CUNA vice president of research and policy analysis. “Car and light truck sales have been generally trending down since the start of the year--and most analysts have concluded sales will be generally softer going forward. However, the overall sales volumes will remain quite high despite the deceleration.
"In addition, credit unions have a relatively small share of the aggregate vehicle financing market and very attractive auto loan interest rates,” Schenk said. “So they typically are able to maintain big portfolio gains even as auto sales begin to slow. Current data reflects this historical norm.”
Credit union new-auto loans increased by 1.3% in May--a 16% annualized advance. Used-auto loans grew even faster, gaining 1.7%--a 20% annualized pace.
Credit cards loans were up 0.8%. Adjustable-rate mortgages rose 0.7%, which other mortgages loans and home-equity loans both increased 0.6%. Fixed-rate first mortgages rose 0.4%.
“While indirect loan payoffs may pose challenges to maintaining these lofty results, CUNA economists expect solid growth throughout the remainder of the year,” Schenk said.
Credit union savings balances declined 0.1% in May, compared with a 0.2% decline in April. One-year certificates led savings growth, rising 0.8%, followed by individual retirement accounts, money-market accounts, and regular shares, which all rose 0.2%. Share drafts were on the decline at -0.3%.
Credit unions added nearly 408,000 memberships in May--a 0.4% monthly increase which nearly matched the percentage gain CUNA reported in April. On a year-over-year basis memberships are up 4.2%--a bit faster than the 4.1% increase reported for full-year 2016.
“The credit union value proposition is obvious and is increasingly embraced in the marketplace,” Schenk said.