Credit unions continued their pattern of strong loan growth in September, but CUNA chief economist Mike Schenk said on Monday that growth will weaken as the Fed continues to raise rates.
“Loan growth will slow down over time,” Schenk said.
of CUNA monthly credit union quote released on Friday showed the credit union posted big gains in all major areas except first mortgages. Total outstanding loans rose 19.6% year-on-year to his $1.5 trillion, up 2.1% from the previous month. His average profit in September was 0.9%.
Schenck said the report showed an equally strong increase in loan balances from the previous month of the year.
The 2.1% increase from August to September marked the third consecutive monthly increase of over 2%.
“Looking back over the last 30 years, there has never been a calendar year in which three-month lending increased so quickly.
Auto loans remain one of the main growth areas.
New car loans increased 22.7% year-on-year to $176.6 billion, up 3% month-on-month, with an average increase of 1% in September.
Used car loans increased 19% year-on-year to $309.9 billion, up 2.1% month-on-month, with an average increase of 0.8% in September.
The Fed’s G-19 Consumer Credit Report, released Monday, showed credit unions increased their share of the nation’s total auto loan balance. The credit union took his 34.8% share, a record high as of September 30, 2021, up from 33.3% in June and 31.1% in September.
In 2015, the credit union share was only about 25%. This year he set new records in June and September after rising to a high of 32.6% by the end of 2018 and falling to a low of 30.1% in June 2021.
The G-19 also showed credit unions increasing their share of credit card debt.
As of September 30, credit union credit card balances were $70.3 billion, up 14% year-over-year and up 0.7% from August, with an average increase of 0.3% in September.
The credit union credit card debt share was 6.7% in 2022-09, compared to 6.2% in 2022-08 and 6.4% in 2021-09.
Banks had $1.2 trillion in credit card debt as of September 30, up 16.8% year-on-year and up 0.4% from August. Bank shares were 91.0% in September, unchanged from August, and up from 90.2% in September 2021.
But real estate is suffering.
The Mortgage Bankers Association estimates that first mortgage originations in the third quarter were $480 billion, down 55% from the same period last year. We expect fourth-quarter originations to decline 59% to $410 billion.
in top 10 credit unions By asset, residential real estate originations were $11.8 billion in the third quarter, down 33% from $17.6 billion a year ago and down from $15.4 billion in the second quarter.
On its balance sheet, CUNA estimated all credit unions held $549.4 billion in first mortgages, down 2% year-on-year and up 1% month-on-month, with an average September profit of 1.1%. was.
Second lien mortgages increased 17.8% year-over-year to $100.3 billion, up 3.6% from the previous month. The average profit in September was 0.2%.
Loans are growing fast, but savings are lagging. He saved $1.9 billion on Sept. 30, up 6.6% from a year earlier and up 0.7% from the previous month.
“And what that means is that the loan-to-equity ratio is going up and going up pretty strongly,” Schenk said.
The stock lending ratio stood at 79.0% on September 30, up from 77.9% the previous month and 70.4% in September 2021.
“This is much closer to the long-term average of 73% compared to 71% pre-pandemic,” Schenk said. “That means either not much liquidity, or liquidity has tightened very significantly over the year, and that was certainly the case in September.”
Schenck cited improved loan quality and membership growth as two of the positive trends in the September report.
Credit union membership stood at 136.1 million as of September 30, up 3.8% year-on-year. Schenck said it was “unbelievable” compared to the US population growth rate of about 0.5% per year.
The 60+ day arrears rate stood at 0.49% on Sept. 30, up from an all-time low of 0.42% on Mar. 31 and about half the long-term average of 0.96%.
“Delinquency rates are at near all-time lows,” Schenk said.