Lending in 2021

CUNA economists predict 6% loan growth next year, but warn about declining asset quality.

November 9, 2020


One fact is clear in the face of uncertainty presented by the coronavirus (COVID-19) pandemic: Credit unions have shined in their efforts to support members, says Mike Schenk, CUNA’s chief economist and deputy chief advocacy officer.

Schenk, who addressed the CUNA Lending Council Virtual Conference, cites these statistics about credit unions’ response to the pandemic:

  • 95% provided loan modifications.
  • 90% waived fees for members.
  • 80% introduced new loan products to meet members’ needs.

Plus, credit unions facilitated more than 170,000 Small Business Administration Paycheck Protection Program loans, averaging $49,000 each.

“This is an amazing record of accomplishment,” Schenk says. “It clearly shows that credit unions are different from for-profit financial institutions—with a distinct focus on average working folks and Main Street, mom-and-pop independent businesses, not professional sports teams, national chain restaurants, and the like. As in past crises, credit unions continue to lend during tough times while other providers hunker down.”

More challenging economic times ahead mean many members will require credit unions’ continued assistance, Schenk says. The surge in COVID-19 cases and uncertainty related to additional stimulus payments put the recovery at risk.

He predicts a 1% decline in gross domestic product in 2020, followed by 3.5% growth in 2021. “We won’t be back to normal until mid-2021.”

Schenk describes the pandemic’s effect on the economy as “lumpy”: It varies significantly from region to region, state-to-state, and even between counties in each state.

“Think about your field of membership and your geography through that lens,” he says. “That will determine how the recession affects your credit union and your members, especially regarding demand for loans.”

Schenk says the pandemic accelerated existing trends of lower loan demand and a so-called “savings glut.” CUNA economists predict loan growth of 6% in both 2020 and 2021, led by credit cards, personal loans, and used auto loans.

But he warns of possible “significant deterioration in asset quality” depending on whether and when Congress approves additional stimulus funding.

CUNA economists forecast delinquency rates of 1% in 2020 and 1.1% in 2021, up from 0.57% at mid-year 2020. Census bureau research shows a distinct possibility of a year-end wave in both evictions and mortgage payment challenges.

“We expect growth in unsecured loans as people try to get through the recession,” Schenk says. “We expect lending to be pretty firm in 2021, but it will get tougher before it gets better.”

Learn more about the 2021 lending outlook in the Winter 2020 issue of Credit Union Magazine.

Click here for more conference coverage from CUNA News. Learn more about the CUNA Lending Council, a member-led professional society for credit union executives, at