Loan balances at credit unions are on pace to rise twice as fast as the average pace seen over the past two years.
That's according to CUNA Mutual Group's July Credit Union Trends Report, which tracked data through May.
Credit union loan balances rose 1.2% that month, almost twice as fast as the 0.65% average pace set in May 2012 and May 2013.
Total loan balances were up 3.3% year-to-date, versus 1.5% set during the first five months of 2013, the report noted.
What's driving the surge in credit union lending?
Steve Rick, the new chief economist at CUNA Mutual since his predecessor, Dave Colby, retired July 11, pointed to five factors for the rise in loans.
“Rising consumer confidence, rising household expectations for income growth, an improving labor market, improved consumer balance sheets and credit unions gaining a larger piece of the consumer credit pie,” Rick said.
Indeed, the credit union share of the total U.S. consumer credit market rose in the last year from 8.4% in May 2013 to 8.9% today, he said.
Meanwhile, new auto loans led the pack with loan balances increasing 2.6% in May, versus 0.5% in May 2013, according to Rick. On a year-over-year basis, new auto loans were up 17.3%, which was the fastest pace since 1995.
“Credit unions are offering very competitive loan pricing; five-year new auto interest rates averaged 2.61%, 132 basis points below the bank average,” Rick said. “Moreover, longer-term loans are increasing the affordability of new cars. We expect 16.5 million cars sold this year, up from 15.5 million in 2013.”
In May, credit union auto loan balances rose 1.9% as 16.8 million cars and light trucks were sold in the U.S. at a seasonally adjusted annual rate, according to the trends report. June vehicle sales came in at 17 million.
Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.
Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:
- Breaking credit union news and analysis, on-site and via our newsletters and custom alerts
- Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, GlobeSt.com and ThinkAdvisor.com
Already have an account? Sign In Now
© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.