Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

CU System
Mortgages lead loan growth for CUs in May
MADISON, Wis. (7/1/08)--Credit union loans outstanding increased 1% in May, and 2.8% so far this year, with fixed-rate first mortgages leading loan growth, rising 2.6%, according to the Credit Union National Association (CUNA) monthly sample of credit unions.
Click to view larger image Click for larger view
The 2.8% rise in loans outstanding year-to-date 2008, compares with a 1.6% rise for the comparable five-month period last year. “Credit union real estate lending is the main factor driving the surge in loan balances,” Steve Rick, CUNA senior economist, told News Now. “The exodus of lenders and the tightening of lending standards by other real estate lenders is providing credit unions an excellent opportunity to increase market share.” Credit union fixed-rate first mortgage loan balances rose 10.4% in the first five months of 2008, compared with 6% for the 2007 similar period, he added. “With the mortgage securitization market still froze up, portfolio lenders such as credit unions are increasing their market share in the real estate space,” Rick said. “We can expect this scenario to continue to play out as long as home prices continue to fall across the U.S.” Following the rise in fixed-rate mortgages were home equity (1.8%), credit card (1.2%), and used auto loans (1%). Unsecured personal loans, adjustable rate mortgages, and new auto loans declined 0.7%, 0.5% and 0.3%, respectively. May is the fifth consecutive month in which used-auto loans as a percentage of total loans increased. During the same period, new-auto loans as a percentage of loans have decreased.
Click to view larger image Click for larger view
Credit union savings balances increased 1.9% in May, and 6.7% year-to-date. With payday falling on the last Friday of the month, share drafts led savings growth, increasing 7.9% in May. “For the year, we expect credit union savings balances to grow over 10% because of the tax rebates, slowing economy, falling home prices, and further deleveraging of household balance sheets,” Rick said. Money market accounts (2.9%), regular shares (2.5%), and individual retirement accounts increased, while one-year certificates declined 0.47%. With savings growth outpacing loan growth, the loan-to-savings ratio decreased to 80.4% in May from 81.1% in April. The liquidity ratio--the ratio of surplus funds maturing in less than one year to borrowings plus other liabilities--increased to 19.5% in May from 18.9% in April. Regarding asset quality, credit union 60-plus-day delinquencies remained at 1% in May, a 0.3% increase from May 2007. The movement’s overall capital-to-asset ratio remains at 11.1%. The total dollar amount of capital is $90 billion. The fast deposit growth increased credit union balance sheets and lowered the credit union average capital-to-asset ratio to 10.9% from its recent high of 11.5% last October. “This drop is to be expected during an economic slowdown,” Rick explained. “Capital is meant to be an economic stabilizer, rising during an economic boom and reduced during an economic slowdown, protecting credit union members from the vicissitudes of the economy.”
Other Resources

RSS





print
News Now LiveWire
16.9% of U.S. homeowners underwater, down from peak 31.4% in 2012, reports @zillow http://t.co/EbILqY1HMz
7 hours ago
Breaking at #NewsNow: President Obama signs IOLTA bill into law. http://t.co/5N741Bygmn
8 hours ago
.@edmunds says the week between Christmas and New Year's is the busiest car shopping time of the year.
9 hours ago
.@CFPB sues Sprint for cramming 3rd-party service fees onto consumers' bills http://t.co/mhlMWqLKku
9 hours ago
#HomeDepot #databreach lawsuits consolidated in Georgia http://t.co/A4bei5z0mV
10 hours ago