WASHINGTON-For the first time in “a couple of years,” share growth at credit unions outpaced loan growth, according to CUNA Chief Economist Bill Hampel. CUNA’s Monthly Credit Union Estimates showed that credit union savings outpaced loan growth for the month of September. Savings growth had been at a historically weak level all year long. However, credit union savings grew faster than loans in September at 1.3% bringing the year’s savings growth to 3.6%. Share drafts were up significantly (6.4%) because of an extra payday falling at the end of the month. However, Hampel noted that share certificates were up 2.1%, which indicates “a little more permanent” trend. Additionally, IRAs grew 0.5%. On the other hand, money market accounts dropped 0.6% in September. Loans grew 0.7% in September for a total of 9.2% year-to-date. Despite long-term rates creeping upward, mortgages are still demonstrating a strong growth pattern. `Other mortgages loans’ led the way with an increase of 2.4% with fixed-rate first mortgages at 1.2%. Home equity and ARM growth is slowing but also increased in September. Hampel pointed out that the fixed-rate and adjustable mortgages have flip-flopped as a percentage of the credit union loan portfolio.While ARM lending had been on the rise as a percentage of the loan portfolio between 1999 and year-end 2004, 2005 has seen a steady decline. “ARMs are dropping way off,” Hampel observed. In December 2004, ARMs grew to 10.4% of the portfolio but it has fallen throughout 2005, reaching 7.8% for the month of September. At the same time fixed-rate mortgage growth has increased from 21.3% of credit unions’ loan portfolio in September 2004 to 23.7% in September 2005. “Credit unions’ big strength is in the refi market.As rates keep rising, it will choke off the remaining vestiges of the refinancing boom,” Hampel forecast. New auto loans were second to `other mortgage loans’ at 1.3%. “Employee pricing is a boon to credit unions,” he explained. For a few years, auto financers really pushed the 0% loans, which hurt credit union new auto lending, but with employee pricing credit unions have the opportunity again to compete on interest rates. “The credit union rate on a loan is typically better than an auto financing company,” he said. Hampel noted the jump in credit union loan distribution for new auto loans from 16.8% at the end of 2003 to 17.1% for September 2004 to 18.3% for this September. Unsecured personal loans (-1.0%), credit cards (-0.3%) and used car loans (-0.1%) were all down, CUNA’s economics department reported, but Hampel said the holidays should change that. As of deadline, CUNA was conducting its annual study with the Consumer Federation of America on how consumers plan to pay for their holiday purchases. With savings outpacing loans, credit unions’ loan-to-share ratio decreased from 79.1% to 78.6% in September. The collective capital-to-asset ratio was 11.0%, CUNA’s MCUE found, and delinquencies held at 0.7%. [email protected]

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