Credit Union Trends Report: Long-term interest rates push 30-year mortgage rates upward

In its March 2021 Credit Union Trends Report, based on data from January, the 11th full month of the COVID-19 pandemic, CUNA Mutual Group reported that rising long-term interest rates have pushed up 30-year fixed-rate mortgage interest rates from 2.65% set during the first week of 2021 to 3.02% today.

Credit union loan growth slowed to a 5.3% in 2020, down from 6.5% in 2019, which was the slowest pace since 2012, while credit union savings balances rose 0.9% in January due to $600 stimulus checks being deposited in millions of credit union members’ checking accounts, according to the report.

The report also found that:

  • credit union consumer installment credit balances (auto, credit card and other unsecured loans) declined 0.9% in January, worse than the 0.1% rise set in January 2020;
  • credit union new-auto loan balances fell 0.6% in January, weaker the 0.3% decline set in January 2020, and fell 6% during the last 12 months;
  • credit union fixed-rate first mortgage loan balances rose 0.5% in January, above the 1% decrease reported in January 2020, due to historically low mortgage interest rates;
  • home prices rose a large 0.9% in January from December;
  • the Office of Federal Housing Enterprise Oversight Home Price Index shows home prices rising 10.8% year-over-year, while the National Association of Realtors Existing Home Price Index reports home prices rising a strong 14.1%;
  • credit union surplus funds rose $20 billion, or 3.2%, in January due to deposit accumulation exceeding loan originations;
  • credit union capital grew 8.3% over the last year, the fastest pace since the summer of 2014; and
  • credit unions added 378,000 memberships in January, slightly above the 371,000-gain recorded in January 2020.

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.

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