In its February 2022 Credit Union Trends Report based on data from December, CUNA Mutual Group reported that credit union loan balances rose 7.5% in 2020, up from the 5.3% reported in 2020 and above the 7.2% long-run average.

The report cites two reasons for the increase in credit union loan balances. First, fixed-rate mortgage loan balances rose 15.8% as credit unions held more loan originations on their balance sheets instead of selling the loans in the secondary market. Second, used auto lending grew 10.2% as consumers substituted used car purchases for new car purchases.

Expect loan growth to surge to 9% in 2022 and 2023 as consumers release pent-up demand for new cars and appliances and credit card balances surge as spending on leisure and hospitality increases, the report states.

In addition, the personal savings rate returned to pre-pandemic rates in the fourth quarter of 2021, and during the last three months of 2021, consumers saved 7.4% of their disposable income, down from the 16.1% reported in the first half of the year.

The report also found that:

• real home prices (inflation-adjusted) increased 8.7% in 2021, the fourth fastest pace in modern history, raising concerns regarding affordability and home price bubbles;
• nominal home prices rose 15.7% in 2021, significantly faster than the cost of living as measured by the Consumer Price Index, which rose 7%;
• household debt burdens, as measured by residential mortgages and consumer credit as a percentage of disposable personal income, fell to 87.1% in the third quarter of 2021, down from 87.4% in the third quarter of 2020;
• credit union new auto loan balances rose 0.3% in December, significantly above the -1% pace set in December 2020, but overall balances fell 1% for the full year;
• the housing market closed 2021 on a weaker note, as existing home sales fell 5% in December from November and fell 7% from December 2020;
• the credit union movement’s net capital-to-asset ratio ended 2021 at 10.0%, down from the 10.3% reported at year-end 2020, as asset growth outpaced capital growth; and
• credit unions picked up 5 million memberships in 2021, the biggest membership gain since credit unions began in 1909.

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.