Credit Union Loan Account Balances Rising; Fewer Members Making Payments Above Monthly Minimums

TransUnion report explores the current state of consumer credit and its impact on credit unions

CHICAGO, June 01, 2023 (GLOBE NEWSWIRE) -- The newly released Q2 Credit Union Market Perspectives Report from TransUnion (NYSE: TRU) shows that stubbornly-high inflation continues to put pressure on the monthly budgets of consumers, credit union members among them. This has led to increasing reliance on credit cards and personal loans as borrowers seek ways to make ends meet.

“Credit union members are facing many of the same inflation-driven economic challenges as the overarching market,” said Sean Flynn, senior director of community financial institutions at TransUnion. “As a result, credit unions are seeing increased balances across the board when looking at credit cards, auto loans, mortgages, HELOCs and personal loans. HELOCs and personal loans are seeing particularly high balance growth, up more than 39% and nearly 26% respectively year-over-year (YoY).”

Credit Unions Are Seeing Higher Total Balances YoY

ProductTotal Balance Growth (% YoY)Origination Growth (% YoY)
Auto Loans21%0.5%
Personal Loan26%12%

While balances have increased among each of the aforementioned product lines, it’s more of a mixed bag when it comes to originations. Originations from Q4 2022, the most recent quarter available for origination data, were generally flat for bankcard and auto loans, while they were down 33% YoY for mortgages. HELOCs and personal loans, on the other hand, saw YoY increases. The 13% YoY growth in HELOC originations indicates that, in the face of increasingly high interest rates, credit union members are electing to tap into their home equity to help pay down higher interest debt. Similarly, many credit union members likely sought personal loans, up 12% YoY, to consolidate higher interest debt.

“Credit unions appear to be really focused on serving member needs wherever they can,” said Flynn. “While auto loan and bankcard originations were down for the whole industry in Q4 2022, among credit unions they remained relatively flat. Additionally, credit unions continue to remain a lower-rate alternative when it comes to personal loans, growing those originations by 12% at a time when other lenders saw significantly less growth.”

More Consumers Making Only Minimum Payments

As interest rates and prices continue to rise, fewer consumers are making payments above and beyond their minimum monthly payments. This bears careful attention as recent TransUnion research has shown that excess payments above minimum balances due have proven effective as proxy measures to consumer liquidity, typically dropping significantly anywhere from 6 to 12 months prior to a serious delinquency event.

Serious delinquency rates remained generally stable among credit unions quarter-over-quarter (QoQ), with 60 DPD+ delinquency rates coming in at 0.79% in Q1 2023, seasonally down from 0.83% in Q4 2022. 60+ DPD delinquency was up YoY from 0.50% in Q1 2022.

To learn more, visit the Q2 Credit Union Market Perspectives Report.

About TransUnion (NYSE:TRU) 

TransUnion is a global information and insights company with over 12,000 associates operating in more than 30 countries. We make trust possible by ensuring each person is reliably represented in the marketplace. We do this with a Tru™ picture of each person: an actionable view of consumers, stewarded with care. Through our acquisitions and technology investments we have developed innovative solutions that extend beyond our strong foundation in core credit into areas such as marketing, fraud, risk and advanced analytics. As a result, consumers and businesses can transact with confidence and achieve great things. We call this Information for Good®—and it leads to economic opportunity, great experiences and personal empowerment for millions of people around the world.

ContactDave Blumberg