Credit Union Savings Fall, Loans Lag in October

Credit unions logged one of their weakest months in October as savings balances fell and loan growth lagged from September to October.

The result was an increase in the loan-to-savings ratio to 86.1% — breaking its previous record of 86.0% in January 2019, according to CUNA’s Monthly Credit Union Estimates posted Dec. 13.

Along with the tight liquidity, the report showed loan balances fell from September to October for first mortgages, new cars, used cars and unsecured consumer term loans.

Home equity lines of credit and other second liens did slightly better than average September-to-October gains measured from 2016 through 2022.

The only strong gain was for credit card balances. As previously reported, the Fed’s G-19 Consumer Credit Report released Dec. 7 showed a strong 1.45% gain from September to October, compared with an average gain of 0.4%.

CUNA’s report showed total loans were $1.63 trillion as of Oct. 31, up 8.4% from a year earlier, and rose 0.4% from September, compared with an average October gain of 0.7%. It was the weakest September-to-October gain since October 2020’s 0.2% gain.

Total car loans grew 5.4% to $509.3 billion from a year earlier, and fell 0.2% from September, compared with an average October gain of 0.5%. It followed a 0.1% drop in September. The last time auto loan balances fell for two consecutive months was from March 31 to May 31, 2020 — the start of the COVID-19 pandemic.

Total real estate grew 8.7% to $715.9 billion from a year earlier, and rose 0.2% from September, compared with an average October gain of 0.7%.

But since October, trends may have begun to reverse:

• Data from the Mortgage Bankers Association showed mortgage applications have been increasing since the end of October, as rates for 30-year first mortgages have fallen to their lowest level since July.
• Cox Automotive predicted Friday that used car sales – where credit unions are the top lender – will beat sales expectations this year as lower prices and higher inventory are countering higher interest rates.
• And the Fed signaled Dec. 12 that it expects to cut rates three times in 2024 from its current level of 5.4% to 4.6% by the end of 2024.

CUNA estimates for the nation’s 4,818 credit unions showed membership was 141.3 million Oct. 31, up 3% from a year earlier and up 0.1% from September, matching the seven-year average.

The report also showed that as of Oct 31:

• The 60-day-plus delinquency rate was 0.74%, up from 0.56% a year earlier and 0.72% a month earlier.
• Assets were $2.25 trillion, up 3.2% from a year earlier, and fell 0.5% from September, compared with an average October gain of 0.6%.
• Savings were $1.89 trillion, up 0.7% from a year earlier, and fell 0.6% from September, compared with an average October gain of 0.3%.
• New car loans grew 4.6% to $179 billion from a year earlier, and fell 0.5% from September, compared with an average October gain of 0.6%.
• Used car loans grew 5.8% to $330.3 billion from a year earlier, and fell 0.1% from September, compared with an average October gain of 0.5%.
• Unsecured consumer term loans grew 10.9% to $70.7 billion from a year earlier, and fell 0.7% from September, compared with an average October gain of 0.6%.