PLANO, Texas — Credit unions could see stronger member loan demand in the latter part of 2007 thanks to a rise in consumer spending and personal income in November 2006.
Consumer spending and personal income rose 0.5% and 0.3% last month, respectively, said Brian Turner, manager of advisory services at Southwest Corporate Federal Credit Union. For credit unions, those increases, coupled with the Federal Reserve Board recently keeping the overnight lending rate unchanged at 5.25% for the fourth consecutive time, will have a delayed impact.
"As long as incomes continue to rise [or stabilize] and the labor market remains strong, the economy will continue to have stable growth even absent a significant contribution from the housing sector," Turner said. "It will also support member loan demand later in 2007, although expect usual seasonal weakness during the first quarter."
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Turner said the improved inflation outlook would temporarily help keep long-term interest rates, including fixed-rate mortgages, down over the next few months. Short-term rates will still be volatile over the next few quarters "as the economy completes its transition but levels will be sufficient as to support consumer loan rates over the next six months."
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