Flat Auto Lending Proved Helpful for Credit Unions in May

The good fortune for credit unions in May was that auto lending remained flat, helping overall lending rise modestly from the previous month, according to a report from America’s Credit Unions.

The trade group’s Monthly Credit Union Estimates released Tuesday showed credit unions held $1.64 trillion in total loans on May 31, up 4.1% from a year earlier and up 0.4% from April, compared with an average April-to-May gain of 1.1% from 2014 to 2023.

The one-month gain in the total loan balance was the same as April’s, which followed three months of declines caused by eroding auto loan balances.

New and used auto loans stood at $500.3 billion, down 0.2% from a year earlier but showing a 0.1% gain from April. Even though that’s far below the average April-to-May gain of 1%, it’s better than April’s scant 0.05% gain and the four months of declining balances before that.

New car loans fell 2.4% to $173.9 billion from a year earlier and rose 0.4% from April, compared with an average May gain of 0.8%.

Used car loans grew 1% to $326.4 billion from a year earlier and fell 0.1% from April, compared with an average May gain of 1.1%.

The areas that allowed balances to rise were credit cards, personal loans and real estate:

• Unsecured consumer term loans grew 6.1% to $71.1 billion from a year earlier and rose 0% from April, compared with an average May gain of 1%.
• Credit cards grew 6.5% to $81.5 billion from a year earlier and rose 0.8% from April, compared with an average May gain of 1.3%.
• First-lien mortgages grew 2.9% to $588.9 billion from a year earlier and rose 0.4% from April, compared with an average May gain of 0.9%.
• Second-lien mortgages grew 20.5% to $144.4 billion from a year earlier and rose 1.6% from April, compared with an average May gain of 0.7%.

Savings fared better than lending, allowing the loan-to-savings ratio to fall to 83.3% as of May 31 from 83.7% a month earlier. It was only slightly higher than its 83.2% level a year earlier. Savings were $1.97 trillion, up 3.9% from a year earlier and up 0.9% from April, compared with an average May gain of 0.3%.

Improved savings also helped reduce borrowings and other liabilities to $146.8 billion by 3.1% from a year earlier and by 6.3% from April.

May’s 60-day-plus delinquency rate of 0.84% was unchanged from a month earlier, but was still sharply higher than 0.61% a year ago.

The report measured results for 4,704 credit unions, down 184 from a year earlier and 15 fewer than a month ago, which was on par with the average May loss of 14 credit unions.

The number of credit union members were 142.2 million, up 1.6% from a year earlier and up 0.1% from April, compared with an average May gain of 0.4%.