Mortgages Lead September Loan Growth for Credit Unions

Credit unions built their portfolios twice as fast in homes and other real estate than they did in car loans in September, a CUNA report released Tuesday shows.

CUNA’s Monthly Credit Union Estimates found the nation’s 5,476 credit unions held $382.9 billion in automobile loans as of Sept. 30, and the 4.1% increase from a year earlier was the slowest 12-month gain in at least five years.

Total loans grew 6.5% to $1.12 trillion, and real estate was the major area pushing the overall growth rate higher.

The refinancing boom this year helped credit union real estate loans rise 7.4% to $552.6 billion in the 12 months ending Sept. 30. First mortgages rose 7.6% to $460 billion.

The Mortgage Bankers Association estimates that first mortgage portfolios among all lenders rose 2.7% to $10.6 trillion in the 12 months ending in September. It predicts portfolios will be up 3.1% at the end of this year, and up 3.6% at the end of 2020.

Comparing the CUNA to the MBA numbers, credit unions had a 4.4% share of mortgage balances among all lenders in September, up slightly from 4.2% a year earlier.

But while low rates have been helping mortgage lending — at least refinances — new car sales have stalled nationally and new car loans at credit unions grew only 2% to $149.6 billion.

Just a year ago, new car loans rose 12.7% in the 12 months ending in September 2018. Growth rates have declined steadily since.

Used car lending has fared better, but the trend is similar. Credit unions held $233.3 billion in used car loans Sept. 30, up 5.5% from a year earlier. However, the 12-month gain a year earlier was 9.8% and has been falling since.

Edmunds, an automotive analytics company in Santa Monica, Calif., found interest rates for new cars have been under 6% from July through October, and predicted the late October rate cut by the Fed might help consumers later this year.

“Auto loan interest rates still aren’t as low as they were a few years ago, but it’s good news for shoppers that rates appear to be reaching a point of relative stability,” said Jessica Caldwell, Edmunds’ executive director of industry analysis.

The total number of new cars sold from July through September was only 0.2% greater than 2018’s third quarter, and the number from January through September was down 1.3%, according to Edmunds.

A typical new car loan in October was for a car bought for $37,886, with $33,238 financed with a 69.7-month loan carrying a 5.7% APR and a $565 monthly payment. A year earlier the typical deal was a $36,542 car with $31,200 financed at 6.2% for 69.1 months and $542 monthly payment, according to Edmunds.

On used cars, buyers in October financed $22,661 over 67.5 months at 8.4% with $2,638 down and a monthly payment of $418. A year earlier, they put down $2,615 and financed $21,735 over 67 months at 8.7% and a $405 payment.

CUNA’s report found that credit unions had 121.6 million members in September, up 3.2% from a year earlier. It also estimated:

• Assets grew 6.9% to $1.57 trillion.
• Savings grew 7.1% to $1.32 trillion.
• Capital grew 11.9% to $176.4 billion.
• Fixed-rate first mortgages rose 9.1% to $337.2 billion.
• Adjustable-rate first mortgages rose 3.7% to $122.8 billion.
• Second mortgages rose 10.1% to $34.6 billion.
• Home equity lines of credit rose 4.5% to $58.1 billion.