MCUEs: October sees slower loan growth, increased savings

December 21, 2019

CUNA’s October Monthly Credit Union Estimates show that the pace of credit union loan growth slowed slightly for the month (0.63%) compared to September (0.67%). Year-to-date loan growth registered 5.44%, representing the slowest year-to-date growth for the month of October since 2012.

“Credit union loan growth is on pace to come in at 6.27% for the year, significantly slower than the 8.90% pace in 2018,” said Samira Salem, CUNA senior policy analyst. “Contributing factors include slower U.S. economic growth, weaker automobile sales, and an anemic housing market in the first half of the year.”

October credit union loan growth was driven by growth in personal unsecured loan growth (1.24%) and other loans (1.33%). Year-to-date unsecured personal loan growth was 6.83% in October up from year-to-date growth last October, which was 4.58%. Year-to-date growth in other loans was 13.78% more than double that of the year-to-date growth last October (6.16%).

In addition, the rebound in the housing market that started around September contributed to solid growth in total first mortgages (1.20%),” Salem said. “Total first mortgages registered 7.33% year-to-date growth slightly slower than year-to-date growth last October (7.21%).”

On the flip side, total auto loan growth was in negative territory in October, registering -0.08%. Year-to-date total auto loan growth (2.80%) shows a significant decrease from year-to-date growth rates last October (9.17%).

“If we break down the total auto loan category by auto loan type, we see that used auto loan growth decreased from 0.75% in September to 0.34% in October while new auto loan growth fell from 0.34% in September to -0.73% in October,” Salem said. “Monthly new auto loan growth hasn’t been this slow since April 2011. This slowdown is not surprising given that new auto sales have cooled; according to Marklines, new car sales were down 0.70% year-over-year as of October. Some industry analysts suggest that sales over the remainder of the year may pick up as dealers offer deals to make up for softer sales over the third quarter.”

Credit union membership grew 0.13% in October, which is slightly slower than the 0.14% growth in September.

“Membership growth tends to slow in the fourth quarter so a dip at this point in the year is not unexpected,” Salem said. “That said, year-to-date membership growth in October (2.67%) is significantly slower than year-to-date growth last October (3.82%). If this trend continues, credit union membership is on pace to grow 2.92% this year, which would mark the slowest annual growth rate since 2013.

“Slower economic growth combined with softening auto loans, which are an important source of new members, have contributed to the slowdown in credit union membership growth,” she added.

October savings growth was strong at 0.73% compared to -0.27% growth in September. Year-to-date savings growth is already 6.90%, which is higher than the 2018 annual growth rate of 5.80%.