Credit Union Portfolios Grew Slowly in November

Credit union loan portfolios grew at their slowest pace in more than six years in November as growth remained sluggish for cars and real estate has started to slow from the record gains of last summer, according to CUNA’s monthly estimates.

Meanwhile, the Fed’s G-19 Consumer Credit Report released Friday showed credit unions held $62 billion in credit card debt as of Nov. 30, down 4.8% from a year earlier. They gained share slightly as balances at banks fell 10% to $856.7 billion.

CUNA’s Monthly Credit Union Estimates, released Thursday, showed credit unions held $1.19 trillion in total loans as of Nov. 30, up 5.7% from a year earlier, and the lowest 12-month gain in at least six years. Loans grew 0.2% from Oct. 31 to Nov. 30, following essentially no growth in October, which was the lowest one-month change in at least six years.

Car lending has suffered because of reduced driving during the pandemic. Credit unions are also losing ground to some competitors, especially from captives for new cars and online competitors in the used car market.

New auto loans fell 3.9% to $143.8 billion as of Nov. 30, while used auto loans rose 4.6% to $241.2 billion over 12 months.

Savings continued to spike, another trait of consumers in a recession. Savings grew 18% to $1.59 trillion as of Nov. 30.A year earlier, from November 2018 to November 2019, it rose 8%.

The housing market continues to be the strongest part of the economy, bolstered by record low interest rates that have fed a refinancing surge.

Credit union portfolios continued to reflect those trends in November as first mortgages rose 11.8% to $519.3 billion. The 12-month growth rate is slower than June and July when first-mortgage portfolios were rising at nearly a 14% rate.

The Mortgage Bankers Association’s latest forecasts show overall first-mortgage balances rose 4% in 2020, and are expected to rise 5.1% to $11.67 trillion in 2021 as purchases take a larger role.

Purchase originations, which rose 16.2% in 2020, are expected to rise 9.6% to $1.56 trillion in 2021. Refinancings, which more than doubled in 2020, are expected to fall 44.6% to $1.19 trillion in 2021.

Joel Kan, MBA’s AVP of economic and industry forecasting, said Wednesday that the 30-year fixed rate started the year at a record low of 2.86%.

“The record-low rates for fixed-rate mortgages is good news for borrowers looking to refinance or buy a home,” Kan said. “The steady demand for home buying throughout most of 2020 should continue in 2021.”

CUNA found 126.4 million members at 5,302 credit unions in November, compared with 122.5 million members at 5,490 credit unions a year earlier.

CUNA’s report also showed:

• Fixed-rate first mortgages rose 15.3% to $396.9 billion in the 12 months ending Nov. 30.
• Adjustable-rate first mortgages rose 1.7% to $122.4 billion.
• Second mortgages fell 11.4% to $30.9 billion.
• Home equity lines of credit fell 4.5% to $55.9 billion.
• Capital grew 8.6% to $193 billion as of Nov. 30.A year earlier, from November 2018 to November 2019, it rose 11.6%
• Assets grew 15.8% to $1.85 trillion as of Nov. 30.A year earlier they rose 7.7%
• Loans per member grew 2.4% to $9,402 as of Nov. 30. A year earlier it rose 2.4%
• Savings per member grew 14.3% to $12,553 as of Nov. 30. A year earlier it rose 4.2%.
• Unsecured consumer term loans grew 6.8% to $52.1 billion. A year earlier they rose 11.7%.