WASHINGTON — Savings growth at credit unions continues to be a disappointment.
"We were hoping to see, if not resurgence, at least a turn around in the savings growth. We didn't get it," CUNA Chief Economist Bill Hampel said. CUNA's Monthly Credit Union Estimates found savings down 0.2% in August. Credit union savings is up just 3.3% from a year ago and up just 1.8% year-to-date, compared to 2.3% at the same point in 2005. Certificates (2.2%) and individual retirement accounts (0.6%) were up for the month, while regular shares, share drafts, and money market accounts fell.
"We're on track to see the weakest savings growth in credit unions since World War II at this rate," the economist said.
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On the other hand, credit unions continue to experience "decent loan growth," Hampel said. In August, loans grew 1.2% for a year-to-date tally of 6.2%. However, this is down from the 8.2% for the same period last year. All loan categories showed growth, according to CUNA's MCUE. Other mortgage loans outstanding grew 3.6% in August, followed by adjustable-rate first mortgages (2.7%), credit card loans (1.8%), and other loans (1.4%). Unsecured personal loans, new auto loans, used auto loans, and home equity loans also demonstrated increases.
Credit unions' aggregate loan-to-share ratio is up to 83.0% from July when it reached 81.9%, the data showed. "We're expecting households to actually start saving because they're going to cut back their spending. We haven't seen that yet," Hampel explained. With loans still rising, credit union members are not taking savings out to pay off loans, either, he said.
"It's not just credit union members but households in general are spending more than all of their income, except we're beginning to see numbers that that's moderating. The negative savings rate is coming down, we just haven't seen that in credit unions yet," Hampel said, pointing out that bank and credit union savings rates lag money market accounts. –[email protected]
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