Credit Union Trends Report: Fixed-rate first mortgages rise at fastest rate since 2008, savings soar

In its February 2021 Credit Union Trends Report, based on data from December, the 10th full month of the COVID-19 pandemic, CUNA Mutual Group reported that fixed-rate first mortgage loan balances rose 14.2% in 2020 — the fastest annual pace since the 17.6% reported during the housing bubble of 2008. In addition, savings balances rose 20.6% for all of 2020, faster than the 8.2% pace set in 2018.

Credit union loan balances rose 0.2% in December, below the 0.8% pace reported in December 2019, while the personal savings rate remains almost double the pace set over the last decade, according to the report. During December, consumers saved 13.7% of their income, up from 12.9% in November and 7.6% in December 2019, while the savings rate is expected to rise again in the first half of 2021, due to the recent and future stimulus payments, according to the report.

The report also found that credit union new auto loan balances rose 0.2% in December, below the 0.4% pace set in December 2019, and fell 3.9% for the full year, according to the report.

Also in the report:

  • nominal home prices rose 12.9% in 2020, significantly faster than the cost of living as measured by the Consumer Price Index which rose 1.3%;
  • credit union lending in 2020 was the slowest in nine years;
  • below-trend growth is expected for credit union lending in 2021, followed by a surge in lending in 2022-23;
  • consumer debt-to-income ratios are expected to fall to 30-year lows;
  • record-low mortgage interest rates led to double-digit home price appreciation in 2020;
  • credit union real estate loan balances grew 7.9% in 2020; and
  • credit union surplus funds as a percent of assets rose to 32.7% in December, above its long-run average of 32%, due to savings growth outpacing loan growth during the past year.

The Credit Union Trends Report is a monthly “pulse check” on the state of the credit union marketplace, often placed in a historical context. The report includes data from two months prior and is published and distributed by Steven Rick, chief economist for CUNA Mutual Group. The Trends Report is intended to provide a review and analysis of recent credit union financial performance and operational results in the context of recent economic activity. Data and analysis are provided to establish standards against which credit unions’ own performance can be compared.

Leave a Reply