MADISON, Wis. – Loan growth at credit unions in September continued to rise, with the past 12 months' growth pace the fastest since before the Great Recession, according to CUNA’s Credit Union Monthly Estimates for September, released Friday.
Loans in September totaled $648.7 billion, up from $607.8 billion in September 2012.
"Credit unions reported strong loan growth in September, with balances rising 0.8%, compared to 0.5% in October 2012," said Steve Rick, senior economist at CUNA. "Over the last 12 months, credit union loan balances rose 6.7%, the fastest pace since 2008," he said.
Rick noted that "adjustable-rate first mortgage loan balances posted the biggest increase in September, rising 1.4%, and are up 5.3% over the last year. New- and used-auto loan balances also grew faster than 1% in September and both posted around a 11% growth rate over the last year."
What's behind that growth? Rick attributed it to "both supply and demand factors," which "are driving the accelerated pace of lending: credit unions are lowering interest rates and loosening credit standards to increase the supply of loanable funds while stronger consumers' balance sheets are increasing the demand for loanable funds.
"Rapidly rising home and stock prices are creating what economists call a strong 'wealth effect,' whereby consumers feel wealthier and therefore borrow and spend more out of current income," Rick added.
Meanwhile, savings declined 0.6% in September, compared with a 0.8% increase in August, according to the monthly estimates. However, total savings for September was up to $926.3 billion, from $888.3 billion a year earlier.
Click here for CUNA’s Credit Union Monthly Estimates for September.