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First mortgage loans have continued to prop up overall credit union lending numbers, according to CUNA Mutual Group's latest "Credit Union Trends Report."
The July report, which reflected May 2020 numbers, indicated that during the second full month of the COVID-19 economic crisis, credit unions saw a 1% rise in loan balances.
"Credit union loan growth is forecasted for this year, 2020, to be around 6% and that's mainly due to the record amount of mortgage loans we're originating this year due to these record low interest rates," CUNA Mutual Group Director and Chief Economist Steven Rick said. "So [there's] a big boom in fixed rate mortgage loans at credit unions."
According to the report, every other loan category for credit unions saw negative growth rates. The latest numbers showed that vehicle loan balances fell $2.4 billion and home equity/second mortgage loan balances fell $2.8 billion. Auto lending numbers fell to their lowest point in five years and "now make up only 32.8% of all credit union loan balances."
Unsecured and credit card loan balances are at the lowest levels in credit union history as they now make up 9.2% of all credit union loan balances, according to this latest report.
Rick said that credit unions should expect a very healthy stretch when it comes to savings balances. "We're forecasting a massive 17% growth in deposits this year, mainly due to those stimulus checks that are mailed out, low gas prices, people not spending money as they stay home and of course the volatile stock market as people put their money into a safe insured deposit product at a credit union."
According to the report, credit union savings balances grew at a 21% annualized growth rate in May. The report stated that this was "the fastest pace since August 1986, which was during the height of the Savings-and-Loan Crisis."
Rick stated that a lot could change with these numbers depending on what Congress does or doesn't do for the next round of economic stimulus legislation currently being discussed.
Other highlights from the May reported numbers included:
- Credit unions gained 241,000 new members.
- There are 5,369 credit unions, 37 fewer than April.
- Credit union assets rose 2.6%.
- Credit union average loan-to-savings ratio fell to 76.8%, down from 83% last May.
Despite the expectations that the economy will be in a depressed state for the next 18 months, Rick appeared optimistic. "As we've seen in the last few months, credit unions are stepping up to help their at-risk members in ways never before seen and to a greater extent," he said. "This will benefit both the member and the credit union in the long run."
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Michael Ogden
Editor-in-Chief at CU Times. To connect, email at [email protected]. As Editor-in-Chief of CU Times since 2016, Michael Ogden has led the editorial team in all aspects of content strategy and execution, including the creation of the publication’s exclusive and proprietary research database of the credit union industry’s economic landscape. Under Michael’s leadership, CU Times has successfully shifted to an all-digital editorial product with new focuses on the payments, fraud, lending and regulatory beats. Most recently, he introduced a data-focused editorial product for subscribers that breaks down credit union issues into hard data, allowing for a deeper and more factual narrative for readers. In 2024, he launched the "Shared Accounts With CU Times" podcast, which offers a fresh, inside-the-newsroom perspective through interviews with leaders from the credit union industry and the regulatory world. He dives into pressing credit union issues, while revealing the personalities working behind-the-scenes to push the credit union world forward. His background includes years as a radio and TV anchor/reporter and a public relations and digital/social media manager, where he covered the food and music industries, as well as cooperatives and credit unions. Over the years, he has launched numerous exclusive video and podcast series, including a successful series of interactive backstage interviews with musicians at music festivals, showcasing his social media and live streaming production skills.
