Membership, Loan Growth Remain Healthy

By CUNA Staff02.06.2019

Credit union membership growth is on pace to grow near 4.5% this year, according to CUNA’s latest Monthly Credit Union Estimates, the fastest pace of growth in four decades. However, credit union membership and loan growth softened in November, falling to 0.19% and 0.60%, respectively from 0.24% and 0.70% in October.

“Rising interest rates likely contributed to the weakened growth. Nevertheless, the year-over-year credit union membership and loan growth rates are still a very healthy 4.43% and 9.35%,” said Samira Salem, CUNA senior economist.

In November, adjustable rate mortgage growth declined significantly from 4.5% to 0.71% while fixed rate mortgages rebounded, growing 0.40% as compared to -2.33% in October.

“It’s not surprising that adjustable rate mortgage loans are not as attractive to consumers in an increasing interest rate environment. Home Equity Lines of Credit (HELOCs) also proved to be less attractive in November, registering growth of 0.76% as compared to 2.44% last month,” Salem said. “Members appear to be more price sensitive with HELOC rate increases, possibly putting off big ticket item purchases, home remodels, or finding other ways to manage their cash flow.

“The rebound in fixed rate mortgages is interesting but might be nothing more than buyers trying to beat the expected December rate hike by the Federal Reserve. The Fed did increase interest rates in December, as anticipated by most economists,” she added.

CUNA economists expect modestly higher rates over the next year which will contribute to a continued weaker housing market in the new year. 

Credit union savings balances were up 1.48% in November, largely driven by strong growth in share drafts, which were up 6.15%. Share drafts are on pace to growth 8.55% this year, which is lower than the 9.5% growth in 2017.

(via CUNA News)