Used Cars, First Mortgages Show Big August Gains for Credit Unions

Credit union loan growth picked up speed in August with used cars leading the way, according to a CUNA report released Thursday.

The largest gains continued to be in first mortgages, but the pace of their gains slowed from last year’s peak.

The Fed’s G-19 Consumer Credit Report, also released Thursday, showed credit card balances continuing their recovery, but still short of their levels before COVID-19 was declared a pandemic in March 2020.

CUNA’s Monthly Credit Union Estimates showed total loans stood at $1.24 trillion as of Aug. 31, up 5.5% from a year earlier. The gain from July was 1%, compared with a July-to-August gain of 0.3% in 2020.

New car sales have fallen since a surge in the spring because of microchip shortages that have reduced the supply of new cars. For credit unions, new car loans have been dropping on a year-over-year basis since December 2019.

Credit unions held $143.1 billion in new car loans Aug. 31, down 0.6% from a year earlier and 0.1% higher than a month earlier.

The shortage of new cars has pushed many people into the used car market, driving up prices and depleting inventory. And those forces in turn have led many people to step aside and delay purchases, according to Cox Automotive.

For credit unions, August showed strong gains. Balances were $257.7 billion, up 7.5% from a year earlier. Used car loans rose 1.5% from July to August, compared with a monthly gain of 0.3% a year earlier. The monthly gain was also well above the July-to-August average gain of 0.9% from 2015 through 2019.

First mortgages ended August at $552.6 billion. The 8.1% gain from a year earlier was the biggest among the major loan categories, but also reflected the slowing of the market from its 2020 peak. The gain from August 2019 to August 2020 was 12.7%. However, first mortgages grew 0.7% from July, an improvement from the 0.7% monthly gain in 2020.

Credit unions lost some share of the credit card market in August. They ended the month with $62.2 billion in credit card debt, up 1.3% from a year earlier and up 1.1% from July.

However, banks improved faster. They held $869.3 billion in credit card debt Aug. 31, up 2.5% from a year earlier and up 1% from a month earlier.

Credit unions’ share was 6.4% in August, unchanged from July and down from 6.5% in August 2020.

Just as the savings rate spiked with the pandemic, consumers also started paying down their consumer debt, with credit card balances showing record declines for most of last year among all lenders.

The gap is narrowing, but balances are still below pre-pandemic levels. Credit unions are 5.7% below February 2020’s balances, while banks are down 9%.

CUNA estimated that the nation’s 5,211 credit unions had 130.2 million members as of Aug. 31, up 3.5% from a year earlier. The report also showed these changes from a year earlier:

• Assets grew 13.4% to $2.05 trillion.
• Capital grew 9% to $206.7 billion.
• Loans per member grew 1.9% to $9,560.
• Fixed-rate first mortgages rose 13.8% to $440.6 billion.
• Adjustable-rate first mortgages fell 9.6% to $112 billion.
• Second mortgages fell 10.2% to $28.6 billion.
• Home equity lines of credit fell 3.1% to $56 billion.
• Savings grew 14.4% to $1.77 trillion.
• Savings per member grew 10.6% to $13,571.