Credit unions are facing the same lending challenges as banking companies, setting a pace to have their first full-year decline in 30 years, according to the latest data from the Credit Union National Association.
Loan portfolios among credit union declined 0.2% in October, meaning total credit union loans have fallen by almost 1.2% during the first 10 months of the year. The decline compares with 1.7% growth for the first 10 months of 2009. The dearth in loan demand is expected to hold its pace for the near future as consumers continue to deleverage, said Mike Schenk, CUNA's senior economist.
Shares, or deposits, rose by 0.7% in October and by 4.4% for the first 10 months, Schenk said. "Consumers have come to the realization that it makes more sense to pay down debt," he said in an interview. "Normally, we would expect to see greater loan growth coming out of a recession," Schenk said.
For the first 10 months of this year, credit unions reported a 12.4% decline in new car loans, and a 10.3% drop in second mortgages. Unsecured loans fell 2%, while fixed-rate mortgages and home equity loans both shrank by less than 1%. Used car loans rose by 4.1% and adjustable-rate mortgages by 6% for the first 10 months. CUNA's data is based on a survey of about 400 credit unions.
