In its April 2021 Credit Union Trends Report, based on data from February, CUNA Mutual Group reported that after falling 3.5% in 2020, the U.S. economy is expected to grow at “a remarkable 6%” in 2021.
The report cites various factors driving the rapid economic expansion, including the pace of COVID vaccinations bringing herd immunity earlier for the United States than previously expected. Consumer confidence, travel and retail sales have surged recently as the economy begins to reopen, while the $1.9 trillion COVID relief package passed in March will boost government spending and create a multiplier effect throughout the economy, according to the report.
The report also forecasts credit union loan growth of 5% in 2021, down from 5.3% last year. And on a seasonally adjusted annualized basis, new-auto loan balances rose at a 0.1% pace in February, the first positive growth number since July 2019.
The report also found that:
- credit union loan balances rose 0.24% in February, faster than the 0.22% reported in February 2020 and 5% during the last 12 months;
- credit union consumer installment credit balances (auto, credit card and other unsecured loans) rose 0.45% in January, similar to the 0.5% reported in February 2020;
- credit union new-auto loan balances fell 0.9% in February, weaker than the 0.6% decline set in February 2021, and 4.3% during the last 12 months;
- credit union fixed-rate first mortgage loan balances rose 0.36% in February, above the -1% decrease reported in February 2020, due to historically low mortgage interest rates;
- credit union fixed-rate first mortgage loan balances rose 18.2% over the last 12 months, significantly faster than the last 3 years;
- the contract interest rate on a 30-year fixed-rate conventional home mortgage rose to 2.81% in February, up from the 2.74% in January but lower than the 3.47% reported in February 2020;
- surplus funds rose to 33.9% of assets in February, from 33% in January due to a 1.8% surge in savings deposits while the ratio is up seven percentage points from the 26.8% reported in February 2020 due to deposit growth exceeding loan growth over the last year (19.6% versus 5%);
- the end of the COVID-19 pandemic is expected to decrease credit union loan-to-asset ratios to 59% by the end of 2021, down from 64% at the end of 2020, due to expected loan growth of 5% and expected asset growth of 13.5%; and
- credit union savings balances rose 1.8% in February, below the 2.2% gain reported in February 2020, due to the seasonal factors of tax refunds and bonuses being deposited in credit union members’ share draft and regular share accounts, which increased 4% and 2% respectively.
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.