CHICAGO (11/13/14)--Low auto-loan delinquency rates and high demand for new and used cars have credit union executives thinking that autos will offer the most opportunities for gains in loan growth next year, according to a recent survey by TransUnion.
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Of the 142 credit union executives polled, 46% picked auto loans as the top growth opportunity over the next 12 months, while only 22% of executives chose mortgage loan growth as the best opportunity.
About 84% of those polled ranked auto loans in their top three areas for growth, according to TransUnion.
"While auto-loan performance in the last few years has been strong across the board, it is clear that credit union executives continue to value these loans going forward over other growth areas such as mortgages, credit cards and home equity lines of credit (HELOCs)," said Ezra Becker, TransUnion executive vice president of research and consulting.
"In the longer term, we might anticipate greater focus on mortgage and HELOC growth as home values continue their upswing," Becker added.
Annually, new-auto loans have risen 19.8% and used-auto loans have climbed 12.6%, according to the Credit Union National Association's September monthly estimates (News Now Nov. 3).
Overall credit union loans outstanding posted a 9.4% annual increase, the estimates found.
The TransUnion survey found that credit unions have seen increases in membership volume over the past 12 months, with 61% of credit unions experiencing up to a 5% increase in volume and 26% experiencing an increase of more than 5%.
CUNA's monthly estimates place total credit union memberships in the United States at 101.5 million as of September.
"Results from our study and our daily interactions with credit unions from across the country lead us to believe that this industry is in a position to achieve and maintain substantial growth," said David Dodson, TransUnion vice president of credit unions. "Using new technologies and risk-management strategies will be among the catalysts to help credit unions make great strides in building their books of business in 2015."
Further, 7 out of 10 credit union executives believe they are more able to compete with traditional banks than they were five years ago, with about 57% of those polled saying their ability to compete with banks has improved in the last year alone.
Competition with banks, however, doesn't mean that credit unions are ditching their principles of prudent lending.
Only 52% of credit union executives said that credit risk falls within one of their top three challenges in reaching their loan-growth goals over the next year, TransUnion said.
Additional highlights from the survey: