CUs Loan Growth Still Tops 10% in July

Credit union loan growth remained in the double digits in July even as some movement economists expect it to slow this year.

CUNA Mutual Group’s monthly Credit Union Trends Report showed credit unions held just over $1 trillion in loans on July 31, up 10.2% from July 2017. The growth rate from June to July was 1.1%, slightly outpacing the 1% one-month growth a year earlier.

The Madison, Wis.-based CUNA Mutual Group’s report showed some slowing in car loans, but total loan growth has been on a slightly accelerating trend since January when portfolios were 9.8% larger than a year earlier.

And credit unions continue to outperform banks and other lenders.

The Federal Reserve’s latest G-19 Consumer Credit Report showed credit unions gained loan share. Credit unions held 5.9% of credit card debt in July, up slightly from a month earlier, and up from 5.7% in July 2017. Credit union’s share of non-revolving loans was 13.5% in July, up from 13.4% in June and 13% in July 2017.

Car loans account for about 94% of non-revolving loans among credit unions but only about 40% among all lenders. More than half of the nation’s non-revolving loans are government and private student loans.

Steven Rick, CUNA Mutual Group’s chief economist, said the $508 billion in real estate loans credit unions held in July represented 4.9% of the U.S. market for first and second liens, up from 4.6% in June 2017.

“The stage is set for another strong year of credit union first mortgage growth as rising purchase activity offsets slower refinance business,” Rick said.

CUNA forecasts total loan growth for credit unions to be 9% to 9.5% this year, and 7% to 7.5% next year. That compares with growth of 10.9% in 2017 and 10.4% in 2015 and 2016.

The Credit Union Trends Report showed car loans up 11.8% for the past 12 months, down from 12-month growth rates of 13.6% for the previous two Julys. Total real estate balances rose 9.7% over the year, slightly down from the 9.8% growth a year earlier. The report also showed:

• New car loans rose 0.7% to $144.9 billion from June to July, compared with 1.3% a year earlier. For the year, they were up 12.9%.
• Used car loans rose 1.2% to $221 billion from June to July, compared with a 1% gain a year earlier. For the year, they’re up 11.1%.
• Credit cards rose 1.2% to $59.2 billion from June to July, compared with 1.5% a year earlier. The balance is up 8.2% for the year.
• First-lien mortgages rose 0.1% to $420.7 billion from June to July, compared with 0.6% a year earlier. The balance is up 10.5% for the year.
• Second-lien mortgages rose 2.5% to $87.3 billion from June to July, compared with 1.5% a year earlier. The balance is up 5.7% for the year.
• Member business loans rose 2% to $83.3 billion from June to July, compared with a 1.8% one-month drop a year ago. For the year, they grew 20.4%.