Loan balances at credit unions are on pace to rise twice as fastas the average pace seen over the past two years.

That's according to CUNA Mutual Group's July Credit Union Trends Report, which tracked data throughMay.

Credit union loan balances rose 1.2% that month, almost twice asfast as the 0.65% average pace set in May 2012 and May 2013.

Total loan balances were up 3.3% year-to-date, versus 1.5% setduring the first five months of 2013, the report noted.

What's driving the surge in credit union lending?

Steve Rick, the new chief economist at CUNA Mutual since hispredecessor, Dave Colby, retired July 11, pointed to five factors for therise in loans.

“Rising consumer confidence, rising household expectations forincome growth, an improving labor market, improved consumer balancesheets and credit unions gaining a larger piece of the consumercredit pie,” Rick said.

Indeed, the credit union share of the total U.S. consumer creditmarket rose in the last year from 8.4% in May 2013 to 8.9% today,he said.

Meanwhile, new auto loans led the pack with loan balances increasing 2.6% inMay, versus 0.5% in May 2013, according to Rick. On ayear-over-year basis, new auto loans were up 17.3%, which was thefastest pace since 1995.

“Credit unions are offering very competitive loan pricing;five-year new auto interest rates averaged 2.61%, 132 basis pointsbelow the bank average,” Rick said. “Moreover, longer-term loansare increasing the affordability of new cars. We expect 16.5million cars sold this year, up from 15.5 million in 2013.”

In May, credit union auto loan balances rose 1.9% as 16.8million cars and light trucks were sold in the U.S. at a seasonallyadjusted annual rate, according to the trends report. June vehiclesales came in at 17 million.