CU Growth in August: Hot It Was Not

Credit unions shambled from July through August with weak loan and savings growth.

CUNA’s Monthly Credit Union Estimates posted Monday showed July-to-August gains were significantly weaker than averages for the previous seven years for savings, new car loans and first mortgages.

Credit unions’ total loan balances grew 0.8% from July 31 to Aug. 31, slightly below the average gain of 0.9% for those months from 2016 through 2022.

Overall loan growth was bolstered by stronger-than-average gains for unsecured personal loans, home equity and other second liens.

Middling performances came from used cars and credit cards.

Savings were $1.89 trillion on Aug. 31, up 0.1% from July, compared with an average August gain of 0.4%. Savings were up only 0.6% from a year earlier. August savings typically match membership growth, which also rose only 0.1% in August, compared with its 0.4% average.

Total loans were $1.61 trillion Aug. 31, up 0.8% from July, compared with an average August gain of 0.9%. Loans were 10.6% higher than a year earlier.

Total car loan balances grew 0.5% — half their normal July-to-August rate.

The biggest factor was new car loans, which fell 0.1% from July to $179 billion in August, compared with an average August gain of 1%. Used car loans were $329 billion, rising 0.8% from July, compared with an average August gain of 1%.

Compared with August 2022, new car balances grew 5% and used cars grew 8%.

Cox Automotive reported Sept. 11 that credit availability increased among all lender types in August, but among credit unions the most. However, in the past 12 months credit unions have tightened the most while auto-focused finance companies have loosened the most.

Among all lenders, new car credit was tighter in August, while credit availability improved for other channels.

CUNA’s report showed first-lien mortgages continued to underperform as the housing market remains constrained by record-high mortgage rates that deter buyers and make sellers holding record-low 3% to 4% mortgages reluctant to sell.

First-lien mortgages rose 0.2% from July to $575.8 billion in August, compared with an average August gain of 0.9%. Fixed-rate first mortgages rose 0.1% from July to $474.2 billion, while adjustable-rates rose 4.1% to $101.6 billion.

Over the 12 months, credit union first mortgage balances have grown 5.1% with fixed-rate up 1.3% and adjustable-rates up 26.7%.

Home equity lines of credit and second-lien mortgages rose 3.4% from July to $130.6 billion in August, compared with an average August gain of 0.7%. Helocs grew 2.8% to $82.3 billion and second mortgages grew 4.3% to $48.4 billion.

Over 12 months, second liens grew 33.8%, as HELOCs grew 23% and second mortgages rose 58%.

Another area of spectacular growth is unsecured term loans, which rose 3% from July to $72 billion in August, compared with an average August gain of 1.1%. Personal loans grew 17.4% from a year earlier.

Credit card balances have also been rising faster than total loans over the past 12 months, but not in August.

Fed’s G-19 Consumer Credit report released Oct. 6 showed credit unions held $79.6 billion in credit card debt Aug. 31, up 0.9% from July to August, matching the seven-year average.

Credit unions’ share of U.S. credit card balances was 6.4% in August, unchanged from July and up from 6.2% in August 2022 as credit unions took shares from finance companies and other small lenders.

Banks have also increased their share by 20 basis points over the past 12 months. Banks’ share was 90.4% in August, unchanged from July and up from 90.2% in August 2022.

Banks far outperformed credit unions from July to August, increasing their credit card balances 1.68% to $1.1 trillion, compared with a seven-year average of 1.0%.

Credit unions have done better over the past 12 months. Their credit card balances are up 13.9%, while banks’ are up 11.2%.