Credit Unions Enjoy Early Spring in Loans
CUNA Mutual finds the January to February lending bounce is bigger than usual.
Credit union loans grew at a faster pace from January to February than they did for the same months since at least 2015, according to the Credit Unions Trends Report released Thursday.
February is usually a sluggish month for lending, but this year credit unions ended February with $990.5 billion in loans on their books, up 0.5% from Jan. 31 and 10.4% from February 2017. Previous January-to-February gains were 0.2% in 2017, 0.1% in 2016 and 0.3% in 2015, according to the report from CUNA Mutual Group in Madison, Wis.
Cars and member business loans continued to lead portfolio growth for the 12 months ending Feb. 28. Member business loans grew 14.1% to $76.1 billion, while car loans grew 11.7% to $344.6 billion. Total real estate growth lagged, rising 9.5% to $484.8 billion.
Credit unions held $208.1 billion in used car loans Feb. 28, up 10.8% from a year ago. From January to February, used car loans grew 0.9% compared with 0.6% a year earlier. New car loans reached $136.6 billion by Feb. 28, up 13.2% from a year ago. From January to February, new car loans rose 0.7%, compared with a 0.4% gain a year earlier.
After months of slowing growth, the February spring in new car portfolio growth occurred “despite the fact that February is historically the weakest new auto loan growth month of the year,” the report said.
CUNA Mutual economist Steven Rick said he expects U.S. new car sales to exceed 17 million vehicles in 2018, above the 16.5 million units economists believe is the normal inherent demand.
Rick said factors supporting the rise in car sales include “the suburbanization of millennials,” low debt, easy credit, lower unemployment, higher pay and pent-up demand.
But as millennials press the gas pedal, their parents will be applying the brakes. “The aging of the baby boomer generation will create a vehicle sales headwind over the next 10 years as older drivers reduce their vehicle needs,” Rick said.
The report also showed other changes for the 12 months ending Feb. 28:
- Assets grew 6.2% to $1.4 trillion.
- Savings grew 5.9% to $1.2 trillion.
- Capital grew 6.4% to $150.3 billion.
- Members grew 4.2% to 114.5 million.
- Credit cards grew 9% to $57.2 billion.
- First-lien mortgages grew 9.7% to $399.4 billion.
- Second-lien mortgages grew 8.9% to $85.5 billion.