Lending Shows Slight Improvement for CUs in August

Lending showed a stronger pulse in August, with the growth rates for cars, homes and consumer purchases showing improvement, according to reports issued Monday.

CUNA’s Monthly Credit Union Estimates showed the nation’s 5,488 credit unions held $1.11 trillion in loans Aug. 31, up 6.6% from a year earlier. That was down from a 12-month growth rate of 9.2% for the period ending August 2018, but it was the best 12-month gain since April, including July’s 6.1% growth rate.

Also Monday, the Fed’s G-19 Consumer Credit Report showed credit unions held $64.3 billion in credit card debt on Aug. 31, up 7.5% from a year earlier. Credit unions’ share of credit card debt was 6.15% in August, compared with 6.2% in July and 5.9% in August 2018.

CUNA’s report showed total real estate loans rose 7.5% to $546.7 billion, while car loans rose 4.5% to $381.5 billion.

First mortgages showed the most strength, rising 8.2% to $454.7 billion, while second-liens rose 4.1% to $92 billion.

New car lending remained weakest, rising 3.6% to $149.7 billion. Used car loans rose 5.1% to $231.8 billion.

Some of the improvement is attributed to lower interest rates for consumers following the Fed’s 25 basis point cut on July 31.

The Mortgage Bankers Association’s Sept. 19 forecast has first-mortgage portfolios among all lenders rising 4% to $10.7 trillion by Sept. 30, an improvement from the 12-month growth rate of 3% it forecast a month earlier.

Purchase applications at the end of September were running 9% greater than a year earlier, while the volume of refinances for August and September were biggest two months in nearly three years.

“The slight changes in rates are still causing large swings in refinance volume, and we expect this sensitivity to persist,” said Joel Kan, MBA’s AVP of economic and industry forecasting.

Edmunds, a Santa Monica, Calif. company providing automotive analysis for consumers, forecasts that 4.3 million new cars and trucks will be sold in the third quarter of 2019, down 3.1% from the second quarter of 2019, but up 0.8% from the third quarter of 2018. This would mark the first quarter this year that quarterly auto sales rose from a year earlier.

“All year long we’ve been talking about high prices and rising interest rates keeping shoppers on the sidelines, but in the third quarter those pressures eased up just enough to get consumers back in a buying mood,” said Jeremy Acevedo, Edmunds’ senior manager of industry analysis. “If this momentum continues, we expect a solid finish to the year.”

Credit unions had 121.4 million members in August, 3.5% more than a year earlier. The CUNA report also showed:

• Assets grew 7.3% to $1.57 trillion.
• Savings grew 7.5% to $1.32 trillion.
• Capital grew 11.3% to $174.8 billion.
• Fixed-rate first mortgages rose 10.3% to $333.8 billion.
• Adjustable-rate first mortgages rose 2.9% to $120.9 billion.
• Second mortgages rose 6.6% to $34.4 billion.
• Home equity lines of credit rose 2.7% to $57.7 billion.

The number of credit unions fell from 5,695 in August of 2018 to 5,488 in July of this year.