Lending strength and membership growth led April’s Monthly Credit Union Estimates.
Loans were up 1.1% in April, largely driven by adjustable-rate mortgages, which increased 2.9%. These were followed by used auto loans and home equity lines of lines of credit, which increased by 1.5%, new auto loans (1.2%), other mortgage loans (0.6%), credit card loans (0.3%), and fixed-rate first mortgages (0.2%).
“Auto market analysts expect continued strong demand in the used car market and a slight softening of the new car market from record levels in 2016,” said Samira Salem, CUNA senior policy analyst. “Shifting consumer preference away from passenger cars and toward larger vehicles like crossovers, sport-utility vehicles, and pickup trucks and technological advancements may be a source of headwinds for the new car market.”
Low gas prices over the last few years may have fueled this shift in preferences, Salem said. “The Environmental Protection Agency’s recent announcement that it would revoke Obama-era vehicle emissions standards would ease the way for automobile manufacturers to continue to expand their offerings in this segment of the market,” she added. “Overall, CUNA economists expect continued growth in auto loans in 2018, but expect growth to slow as interest rates tick up.”
In April, credit unions continued their streak of 66 consecutive months of membership growth, with memberships growing at 0.3% to 115.3 million, an annual pace of 3.6%.
Credit union savings balances declined 0.7% in April, compared with a 2.4% increase in March. One-year certificates led savings growth during the month, rising 0.7%, followed by individual retirement accounts (0.2%).
“The increase was probably helped along by an increase in the interest rate on CDs, which reached 1.31% in April, the highest it’s been since September 2010,” Salem said.
On the decline during the month were share drafts (3.4%), regular shares (0.6%), and money market accounts (0.1%).
With a decline in savings and continued loan growth in April, the average loan-to-share ratio increased from 81.5% to 82.9%. We expect this ratio to continue to inch up for the rest of the year as savings wane.
The movement’s overall capital-to-asset ratio increase to 10.5% in April from 10.4% in March.
The total dollar amount of capital increased to 0.2% to $152.5 billion.