MCUEs: Fixed-rate mortgages lead loan growth in November

January 30, 2020

Credit union loans outstanding grew 0.56% in November, compared to a 0.64% increase in October, according to CUNA’s Monthly Credit Union Estimates for November 2019. This is slightly faster loan growth than last November, but the second slowest November since 2013. Overall, credit union loan portfolios are on pace to grow just 6.3% in 2019, the slowest pace of loan growth since 2012.

Low interest rates helped boost fixed-rate mortgages which grew 1.54% in November, the fastest growing loan category. This was followed by adjustable-rate mortgages (0.67%), unsecured personal loans (0.56%), home equity loans (0.49%), used auto loans (0.30%), credit cards (0.18%) and other mortgages (0.06%). On the decline during the month were new auto loans, which fell 0.24% and are on pace for annual growth of –1.17%, which would mark first time that annual new auto loan growth fell into negative territory since immediately after the financial crisis in 2011.

As is common during economic slowdowns, credit union savings growth has picked up considerably in 2019. This trend continued in November as savings balances increased 1.61%, the fastest November increase since 2002 and more than double October’s figure of 0.74%. Share drafts led savings growth during the month, rising 4.65%, followed by regular shares (1.27%), one-year certificates (1.17%), money market accounts (0.99%). Individual retirement accounts declined during November (-0.50%). For the year, 2019 savings are on track to rise just over 9.0%, which would be the fastest annual increase in credit union savings since 2009.

Credit unions’ 60+ day delinquency rose to 0.71% in November, up from 0.68% in October. However, a slight increase in delinquencies towards the end of the year is common and often falls again in March and April after households receive their tax refunds.

The loan-to-savings ratio declined from 84.6% in October to 83.7% in November. The liquidity ratio (the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities) increased from 14.3% in October to 15.4% in November.

Credit union membership growth continues to slow and total credit union memberships grew just 0.14% during November. Annual 2019 credit union memberships are now on pace to rise just 3.4%, which would represent the slowest annual membership growth since 2014. However, the slower pace of growth remains roughly five times the rate of population growth.

Faster asset growth caused the credit union movement’s overall capital-to-asset ratio to decline from 11.2% in October to 11.1% in November. The total dollar amount of capital increased 0.09% to $177.3 billion.