WASHINGTON (8/10/15)--Driven by heightened levels of financing for big-ticket purchases, consumer credit at credit unions surged by $7.5 billion in June, more than doubling the prior month’s gain of $3.4 billion, according to numbers released Friday by the Federal Reserve.
While revolving credit--tied to credit card use--took a step back during the month, the nonrevolving segment that typically reflects financing of larger purchases such as education or automobiles soared by $8.4 billion.
“Rising consumer credit is indicative of a borrowing and lending dynamic in the economy that is well-functioning,” Perc Pineda, CUNA senior economist, told News Now.
Pineda also noted an encouraging set of trends that could bode well for auto lending at credit unions in the coming months.
In the jobs report released Friday, the auto industry posted one of the strongest months of payroll expansion across all industries. (See related story: Rosy July jobs data may suffice for Fed rate hike.)
This means that consumer consumption on automobiles is rising back towards pre-recession levels--backed by the Fed’s data that shows nonrevolving credit continues to accelerate--which should only fuel the credit union movement’s already-healthy lending activity.
For all major holders, consumer credit advanced by $20.7 billion in June, a quicker pace than the $16.5 billion increase seen the prior month (Economy.com Aug. 7).
Revolving credit balances for all major holders rose by $5.5 billion, while the nonrevolving segment increased by $15.2 billion.
“Consumers are feeling more confident in financing big-ticket items thanks to steady gains in the job market and house prices that, although slowing, are trending in the right direction,” said Thomas McCartin, Moody’s analyst (Economy.com). “Extremely low interest rates and easier access to credit are enticing consumers to finance large purchases such as education and vehicles.”