Credit Union Loan Growth Slumps to Record Lows

Credit union loan growth set records in March—records for the slowest growth in more than four years.

CUNA’s Monthly Credit Union Estimates released over the weekend shows the nation’s 5,572 credit unions held $1.07 trillion in loans on March 31, up 8.1% from a year earlier.

That was the lowest rate of 12-month growth since at least mid-2014. In April CUNA economists lowered their forecast for loan growth this year to 7.75%, down from an 8% forecast early this year. Next year they expect 7% growth.

At the end of 2018, loan growth was 8.6% for the movement, and 9.9% excluding credit unions that were closed or merged in the previous 12 months. Total loan growth was at or above 10% from mid-2014 to the end of 2017, well above the long-term average of 7.5% from 1990 through 2018.

Car loan growth was 8.1%, the lowest growth since at least mid-2014, while real estate loan growth was 7.5%, the lowest since May 2015.

February-to-March comparisons were also unfavorable for cars and real estate. The value of the new car portfolio actually fell slightly, while used car loans grew 0.3% compared with 1.2% from February to March 2017.

Despite an improvement for second liens, total real estate growth for the month slowed from 1.2% in 2017 to 0.3% this year.

Credit union assets grew 6.4% to $1.53 trillion over the 12 months ending March 31, while membership rose 3.8% to 119.4 million.

CUNA’s report also estimated these 12-month growth rates for credit unions portfolios:

• New auto loans rose 8.9% to $149.1 billion.
• Used auto loans rose 7.6% to $225.2 billion.
• Fixed-rate first mortgages rose 7.3% to $314.2 billion.
• Adjustable-rate first mortgages rose 6.2% to $122.3 billion.
• Total first lien mortgages rose 7% to $436.5 billion.
• Second mortgages rose 11.7% to $33.2 billion.
• Home equity lines of credit rose 8.1% to $57.9 billion.
• Total second-lien real estate loans rose 9.4% to $91.2 billion.

Some favorable records were maintained.

For example, delinquencies remained near record lows. The value of loans at least 60 days delinquent was 0.67%, up 1 basis point from a year earlier and down 2 bps from February.

And credit unions continue to slowly expand their share of U.S. household savings.

Credit unions held $1.3 trillion in household savings in March, up 5.7% from a year earlier and representing 10.4% of the nation’s $12.48 trillion savings. The share is up from 10.3% in March 2018 and 10% in December, which was the highest year-end share since at least 1982, according to the CUNA report.

Banks’ share of savings was 76.3% in March, down from 76.8% a year earlier, while savings banks had the remaining 5% share, down from 5.6% a year earlier.