CU Lending Contracts
MADISON, Wis. – Credit union lending declined again last month – for the ninth time in the past 12 months – and is on pace for a full-year contraction for the first time in 30 years, since the recession of 1980, according to CUNA.
Lending for credit unions has fallen by 0.9% for the first nine months of the year and is projected to decline by 1% for the full year, according to Mike Schenk, senior economist for CUNA.
“This will be the first year we’ll have negative loan growth in 30 years, since the Carter administration, when credit controls were in place,” Schenk told Credit Union Journal yesterday.
At the same time, share growth is also unusually low, 2.7% year-to-date, according to CUNA’s monthly credit union data, which will be made publicly available today. In fact, there has been negative share growth in five of the past 12 months.
The CUNA economist attributed the fall in lending to the continuing de-leveraging by consumers as they seek to shed household debt. “People are finding if they have more money that not to save it, but to use it to pay down debt, is the best way to go,” said Schenk.
So far in 2010, record low mortgage rates have kept mortgage originations growing, at 3% for fixed-rate loans, and 2.8% for ARMs. Used car lending has also grown at 4% year-to-date.
But there have been big declines in new car loans, the traditional bread-and-butter for credit unions, of 13%. There also has been a decline of 8.9% for fixed-rate second mortgages, another traditional market for credit unions.
CUNA’s monthly data is based on a survey of 475 credit unions and is considered the industry’s most authoritative.