New Car Loan Growth Falls Again in January, CUNA Reports

Credit union vitals started the year on much the same path as last year, with loan growth slowing in most categories, savings exceeding borrowing and new car loans shrinking for the second month in a row, according to a CUNA report released this week.

The Madison, Wis., trade group’s Monthly Credit Union Estimates found the nation’s 5,427 credit unions held $1.14 trillion in total loans on Jan. 31, up 6.7% from a year earlier. That’s lower than the growth rate of 8.7% from January 2018 to January 2019, but a slight improvement from the 6.7% 12-month rate in December 2019.

CUNA Mutual Group’s Chief Economist, Steven Rick, has pointed to the relationship between loans and savings per member as an indicator of the economy’s health. Recessions usually start when savings per member rises 5% or more from a year earlier. Another indicator is the rate of savings growth to loan growth per member.

Savings per member has been rising faster than loans per member since July 2019, when savings per member grew 3.0% compared with 2.5% for loans. In December savings grew 4.8% and loans grew 3.2%. In January, savings grew 6.1% and loans grew 3.3%.

CUNA and CUNA Mutual’s last posted forecast was a pre-coronavirus-worry prediction of 1.8% growth in the U.S. economy this year. On Wednesday, in the wake of the World Health Organization calling escalating the outbreak to pandemic status, Rick revised his 2020 forecast to 0.5% to 1%.

Automobile loans followed December’s trend. New auto loans fell 0.9% to $148.1 billion in January, while used auto loans rose 5.2% to $234.8 billion.

Real estate remained the bright spot, as a continued drop in interest rates keeps the refinance boom alive and led the Mortgage Bankers Association on Tuesday to announce it was raising its forecast for first-mortgage originations. It now expects their value to rise 20.1% this year, instead of a 7.4% drop it forecast on Dec. 13, 2019.

CUNA found credit union first-lien mortgages grew 11.4% to $483.2 billion in January. The MBA is forecasting portfolio balances for all lenders will rise 3.8% this quarter to $10.66 trillion.

Credit union fixed-rate first mortgages rose 13.3% to $354.4 billion in January, while adjustable-rate first mortgages rose 6.7% to $128.8 billion. Second mortgages rose 3.3% to $34.2 billion, and home equity lines of credit rose 0.8% to $58.1 billion.

On March 9, the Fed reported credit unions held $65.9 billion in credit card debt, up 6.1% from a year earlier. Bank credit card debt rose 3.3% to $958.1 billion.

Credit unions ended January with 122.7 million members, 3.3% more than a year earlier. The number of credit unions fell 2.7% to 5,427 from 5,439 in December and 5,576 in Jan. 2019.

CUNA’s report also estimated:

• Assets grew 8.7% to $1.61 trillion.
• Savings grew 9.6% to $1.36 trillion.
• Capital grew 10.2% to $179.8 billion.