The delinquency ratio for credit unions continued to fall in May dropping to a new low of just 0.62%, according to CUNA. That's down from a previous record low of just 0.64% in both March and April, and 0.74% at the end of January.
Bill Hampel, chief economist for CUNA, said the trade group is not sure the reason for the continued fall in the delinquency ratio, but he suggested it may because of the continued growth in new loans for which delinquencies have yet to show up. Loan growth in May was a strong 1.2%-the highest since last August-meaning lending at credit unions grew by 3.5% for the first five months of the year. That compares to just 3% share growth for the first five months, usually a strong for share growth. This is only the third time in the past 15 years when loan growth outpaced share growth in the first five months, according to Hampel.
Mortgage lending continued to lead the way in May, growing by 2.5%; adjustable-rate mortgage expanding by 1.9% and home equity loans by 1.8%, according to CUNA. New car loans grew by a strong 1.5% during the month.
Credit unions also continue to lift their rates on both the lending side and the share side, as short-term rates rise with the Federal Reserve's actions. In May 16% of credit unions raised their new car loan rates; while 8% lifted rates on unsecured loans and 4% on credit card loans. At the same time, 25% of credit unions raised their rates on money market accounts, 40% lifted CDs rates: and 7% increased regular share dividends, CUNA found.
