Businesses and new cars were the fastest growing loan sectors for credit unions in 2016 and loan growth is likely to remain strong this year, CUNA Mutual Group reported Monday.
Credit unions held $892.5 billion in loans on their books Dec. 31, 10.9% more than their portfolio balances at the end of 2015, according to the Madison, Wis., group’s monthly Credit Union Trends Report.
“Expect loan growth to decelerate to 10% in 2017 but remain well above the past 25-year average of 7%,” the report said. “Rising household formations of 1.5 million and continued job creation will keep home and auto sales strong.”
Also, the Federal Reserve found household debt as a percent of disposable income fell to 102% in the third quarter of 2016, the lowest rate since the first quarter of 2002. “This improvement in household debt should help the economy avoid a recession for the next couple of years,” the report said.
Credit unions gained 4.6 million members in 2016, ending the year with 109.6 million members. CUNA Mutual attributed the 4.5% increase to robust demand for credit, lower interest rates and solid job growth that added 2.1 million jobs to the U.S. economy.
“When people get jobs, they may also join a credit union,” the report said. “For 2017, expect another 2.1 million jobs to be created and credit union membership growth to exceed 3.5%.”
First mortgage lending rose 10.4% to $363.5 billion in 2016, while second liens rose 4.2% to $79.1 billion. The report predicts strong home purchase demand to lift prices 5% this year.
“Credit unions are making headway in serving their members’ mortgage needs,” the report said. “Currently 2.4% of members have a first mortgage loan at their credit union, up from 1.9% in 2009. First mortgage credit quality improved significantly in 2016, with delinquency rates falling to 0.63%, down from 0.78% in 2015 and 0.96% in 2014.”
New car loans rose 17.4% to $119.3 billion, while used car loans rose 12.9% to $186 billion. Growth in car loans, credit cards and other consumer installment credit grew 11.8% among credit unions last year, twice as fast as other lenders.
The report also showed:
- Total assets grew 7.3% to $1.3 trillion;
- Member business loans rose 17% to $67.9 billion; and
- Credit card lending rose 6.9% to $53.1 billion and other consumer installment credit rose 8.3% to $38.5 billion.
