Executive Summary October 2024
TruStage’s Chief Economist, Steven Rick, shares trends of lending volume and credit quality. Additional highlights this month include:
Economy
- Credit union liquidity has risen over the last year but remains close to the lowest ratio in credit union
- The average credit union member increased their total credit union deposits by $504 over the last year, from $13,420 in August 2023 to $13,942 in August 2024.
- Year-to-date savings balances grew 9% in 2024, significantly below the past 23-year average of 5.7%, but above the 0.7% reported in 2023.
- But with the Federal Reserve expected to lower short-term interest rates by another 25 basis points later this year, credit union net interest margins could widen as funding costs fall faster than asset
Lending
- During the last 12 months, credit union loan balances increased a relatively weak 5%, which is half the 7% long-run annual loan growth rate.
- Consumer credit outstanding is rising only 3% year-over-year, below the 5% long run average.
- High auto loan rates will ensure that new-vehicle sales remain below the 5 million pace through 2025.
- Following years of higher-than-average home price growth, the housing market appears overvalued. So, expect home price appreciation to slow below the 4% long run average in
- We are forecasting 6% credit union loan growth for 2025 due to faster deposit growth next year, lower loan interest rates on new loans, a shift in consumer spending from services back to goods and rising consumer confidence.
Members/Assets
- The personal savings rate (personal savings as a percentage of disposable personal income) has increased to 5% in August, up from 1% in August of 2022. We expect savings balances to grow 5% in 2024 and 7% in 2025.
- Year-to-date credit union memberships rose 6%, below the 2.4% pace in the similar time in 2023.
- The recent pace of 6% is still faster than the overall U.S. population growth rate of 0.4%. Therefore, credit unions are still picking up market share from banks and other depository institutions.
View full CU Trends Report for October
