A year ago, many credit unions were celebrating vehicle loan portfolio growth driving into positive territory.
The industry has more reason to revel as credit unions experienced a $14.3 billion increase in vehicle loans in 2012, according to CUNA Mutual Group's February Credit Union Trends Report. This translated into an 8.5% annual growth, which was the best performance since 2005, the data showed.
The annual growth rate for new vehicle loans (8.9%) surpassed the used vehicle loan growth rate (8.3%) for the first time since mid-2007, according to the report.
While detailed year-end 2012 data won't be available for at least another month, third quarter 2012 results showed the change in indirect loans accounted for more than 50% of the annual and year-to-date increases in total vehicle loans outstanding, the report noted.
The big question is will credit unions be able to maintain this positive momentum?
“I believe the answer is yes. We assume new vehicle sales will remain strong enough, above the 15 million unit annual rate, manufacturers will continue to ease off on subsidized financing incentives and credit unions will remain very competitive on rates,” said Dave Colby, CUNA Mutual chief economist.
The December 2012 national average credit union new vehicle loan rate estimate is 3.44%, down 56 basis points since December 2011, Colby said.
Overall, total loan growth finished 2012 at 4.4%, a marked improvement over the past three years, Colby pointed out. Vehicle loan growth accounted for 55% of the gain, first mortgages 48% and member business loans at 15%. Final data will likely show record loan originations at credit unions in 2012, he added.
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