Ongoing Rate Increases Have Not Only Not Slowed Member Borrowing (Yet), Pace Has Picked Up

MADISON, Wis.–Not only have ongoing rate increases by the Federal Reserve not slowed down member borrowing, it actually picked up pace through September, according to CUNA’s latest Monthly Credit Union Estimates. But the slowdown is coming, said one economist.

Mike Schenk

“In general, the trends we see are continuations of what we have reported in the recent past,” said CUNA’s chief economist, Mike Schenk. “Despite a very aggressive Federal Reserve,  loan growth actually accelerated for third month in a row, increasing 2.1%. That’s the third month of loan growth over 2%. We have never seen a calendar year where we have had three months of loan growth like that.”

Lending at credit unions grew almost 16.5% year-to-date through September, which is on pace for 22% growth in 2022, which would set another record, according to Schenk.

Loan-to-Share Ratio Hitting High Marks

On the other side of the balance sheet, Schenk said the latest data show savings were up 4.2% in September and are on pace for 6% growth on an annualized basis.

As a result, the industry’s loan-to-share ratio was 79%, up from 71% pre-pandemic and above the long-term average of 72%. “There is not a lot of liquidity; liquidity is tightening very significantly,” Schenk said. “Despite some challenges to credit unions from what we can tell, there are no real issues. But liquidity will be a front and center issue going forward.”

The good news, said Schenk, is the credit union delinquency rate remains steady and near all-time lows.

In addition, he said memberships was up 4.1% in September, compared to population growth of .5%.

“There is a lot of good news in the data,” said Schenk. “But we expect with additional Federal Reserve aggressive interest rate moves that that strong loan growth will be tapering off.”

CUToday