Member business loans, which accounted for 6% of all loans in 2009, increased 5.8% in 2009 but dropped below growth trends seen over the past several years.
It remains to be seen if the pattern will continue with total loan growth for the credit union industry at a historic low of 1%, according to CUNA Mutual Group's February Credit Union Trends Report. Looking at December 2009 data, the weak performance may understate many CUs' actual lending activity. Over the past four months, total loans were down $3.9 billion (0.7%) as CUs defensively position themselves for a rising interest rate environment, noted CUNA Mutual Chief Economist Dave Colby.
Compared to mortgages and vehicle loans, MBL growth appears to be on a slower track. While CUs originated record levels of first mortgages in 2009 they opted to sell record amounts into the secondary markets as an interest rate risk-avoidance strategy, according to Colby. This may help explained the 0.7% annual gain in real estate secured lending, he added.
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Short-term consumer lending such as vehicle loans, credit cards and unsecured loans, was boosted by gains in credit card portfolios, but these gains were offset by the 1.0% decline in total vehicle loans, the data showed.
"Consumer loan demand by members is forecast to be soft through most of 2010 with used vehicle lending as the remaining bright spot," Colby wrote in the report. "We expect first mortgage loan demand to drop as interest rates rise making home purchases less affordable and refinancing less attractive."
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