Lending and membership growth continue to lead strong credit union growth, based on the results of CUNA's August 2017 Monthly Credit Union Estimates.
“So far this year, loans are growing at the fastest rate since 2005 and on pace for another year of double-digit growth, the fourth straight year this has occurred,” said Jordan van Rijn, CUNA senior economist. “We expect this trend to continue into next year, but slow somewhat as interest rates rise and pent-up consumer demand diminishes.”
Credit union loans outstanding grew 1% in August. Adjustable-rate mortgages led loan growth during the month, rising 2%, followed by used auto loans (1.3%), home-equity loans (1.2%), new auto loans and unsecured loans (both rising 1.1%), credit card loans (1%), other mortgage loans (0.6%), and fixed rate mortgages (0.4%).
“Credit unions continue to see strong growth in mortgage lending,” van Rijn said. “In August, adjustable-rate mortgage led all loan growth, and home equity loans and other mortgages also grew at good clips. This is likely due to consumers taking advantage of continued low borrowing costs. However, as the Fed increases interest rates, credit unions may see mortgage lending decline slightly in the near future.
“With low unemployment, high consumer confidence and a growing economy, consumers are spending more and taking on more debt,” van Rijn said. “This is no different at credit unions, where loan portfolios continue to grow at historically high rates.”
Total credit union memberships grew 0.5% during August to 112.7 million. “Credit unions continue to add members at incredibly fast rates: In August, credit union membership increased another 0.48% putting membership growth on track for a second straight year of annual membership growth of over 4.0%,” van Rijn said.
Credit union savings balances increased 0.1% in August, compared with a -0.7% decline in July. One-year certificates led savings growth during the month, rising 0.8%, followed by individual retirement accounts (0.01%). On the decline during the month were money market accounts, share drafts, and regular shares, which all declined -0.1%.
The loan-to-savings ratio increased to 82.3% August from 81.5% in July. The liquidity ratio (the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities) declined to 13.7% in August from 14.2% in July.
Credit unions’ 60 day-plus delinquency remained at 0.8% in August.