Lending Continues To Decline Among CUs

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MADISON, Wis. – In what is turning out to be one of the poorest years on record for lending among credit unions, loan portfolios declined another 0.2% in October, meaning total credit union loans have fallen by almost 1.2% for the first ten months of the year, according to CUNA.

That’s down from a meager 1.7% growth for the first ten months of 2009 and 6.1% and 5.6% growth for the same periods in 2008 and 2007.

As a result, credit unions are on pace for a fall in lending for the full year for the first time since the recession of 1980.

The dearth in loan demand is expected to hold its pace for the near future as consumers continue to de-leverage, according to Mike Schenk, senior economist for CUNA.

At the same time, shares, or deposits, increased by 0.7% in October and by 4.4% for the first ten months, noted Schenk, who explained that it is unusual for share growth to exceed loan growth coming out of a recession, as most economists the economy is in the process of. “Consumers have come to the realization that it makes more sense to pay down debt,” Schenk told the Credit Union Journal. “Normally, we would expect to see greater loan growth coming out of a recession.”

For the first ten months of 2010, credit unions reported a whopping 12.4% decline in new car loans, and a 10.3% drop in second mortgages, as well as a decline of 2% for unsecured loans; and a decline of less than 1% for both fixed rate mortgages and for home equity loans, according to CUNA.

Used car loans rose by 4.1% and ARMs by 6% for the first ten months.

CUNA’s monthly data is based on a survey of about 400 credit unions.

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