Key measures of credit union health continued in a positive direction in August as loans and memberships grew, and delinquency rates declined, according to a CUNA Mutual Group report released Monday.
Credit unions had 108.1 million members at the end of August, up 4.2 million members in the past year, including 526,000 new members from July to August. The annual 4% growth rate is the highest in credit union history, according CUNA Mutual’s “Credit Union Trends Report.”
“Membership growth is being driven by strong job gains and Americans’ demand for credit,” the report said. Another factor drawing members are higher monthly fees being charged by banks to make up for Dodd-Frank Act caps on debit card fees.
Meanwhile, only 0.76% of the $860.8 billion in total loans held by credit unions were two or more months delinquent in August, down from a 0.78% delinquency rate a year earlier.
Credit unions carved out a larger share of the overall consumer installment credit market, which includes auto loans, credit cards and unsecured loans. Credit unions held $369.6 billion in consumer installment credit in August, accounting for 10% of the U.S. market, up from a 9.5% share a year earlier.
Vehicle loans, the largest portion of installment credit, rose 14% to $292.4 billion in August. As a percent of total credit union loans, car loans accounted for 34%, up from 33% a year ago.
Real estate loans grew at a slower pace, slipping just below half of the value of total credit union loans in August. First lien, second mortgages and home equity loans grew 8.5% over 12 months to reach $33.5 billion in August.
CUNA Mutual predicts the interest rate for 30-year fixed mortgages to reach 4.26% by the end of 2017.
“However, we don’t expect the interest rate rise to have a significant negative impact on housing demand due to interest rates remaining at historically low levels,” the report said. “Demand for homes is expected to increase in 2017 due to a rising number of household formations and the tightening labor market boosting wage growth.”
Member Business Loans were $65.4 billion in August, up 14.9% from a year ago.
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