Nearly half of all credit union loan growth this year can be traced back to auto loans, setting the stage for record expansion across the industry for 2013.
“We are running out of superlatives, but don't need any,” wrote Dave Colby, chief economist for CUNA Mutual Group in the company's November Credit Union Trends Report, which tracked data through September.
Indeed, during the past year, auto loan portfolio expansion of $19.7 billion accounted for 48% of all credit union loan growth, the data showed. Vehicle loans now represent 30.7% of all credit union loans, up from a low of 28.7% at the end of 2011, but below the pre-recession level of 33.3%.
New vehicle loans accounted for 18% of all loan growth year-to-date and year-over-year, according to the trends report. Currently, the national average new vehicle loan rate is 3.19%. While this is down 10% during the past year and 50% since the beginning of the recession, it is significantly better than an investment yield with a similar duration, Colby noted.
The used vehicle loan portfolio was up $12.4 billion during the past year, $11.2 billion year-to-date and $5.1 billion or 4.1% in the past quarter, the data showed. Colby said the 3.95% average loan rate is a very good return in today's market.
Meanwhile, good news continues on the entire lending front for credit unions, Colby pointed out. The 6.7% annual gain translates into an additional $41 billion in loans on the books and annual growth at its highest rate in 4½ years, he said.
“Looking at factors impacting future loan growth, we see stronger member demand and greatly reduced financing subsidies from manufacturers as positives, but the end of the mortgage refinance boom, re-emerging credit card competition, and loan sales due to interest rate risk management, restraining growth potential,” Colby said.
On balance, CUNA Mutual's forecast showed annual growth of 6.2% in 2013 and annual gains averaging 6.5% through 2015.
“Interestingly enough, the sources of loan growth shown are consistent in distribution with what we posted a year ago, but the dollar amount is up 75% on a year-over-year basis and 83% year-to-date through September,” Colby said.
Currently, member business loans are up just 0.9% year-over-year after averaging 9.3% during the past three calendar years, according to the report. Colby said he will wait for third quarter data revisions before commenting on MBL trends.
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