Credit Union Originations Down While Balances Continue to Rise

TransUnion’s Q3 2023 Credit Union Market Perspectives Report explores the current state of consumer credit and its impact on credit unions

CHICAGO, Sept. 14, 2023 (GLOBE NEWSWIRE) -- The newly released Q3 Credit Union Market Perspectives Report from TransUnion (NYSE: TRU) shows increasingly high interest rates have depressed new credit union credit account originations. Yet, borrowers continue to take advantage of existing credit lines as balances across most credit products continue to grow, with personal loans and home equity loans leading the way.

“Inflation and cost-of-living challenges continue to result in many credit union members using credit products as a way to get by, and this can be seen in the continued growth in balances in existing accounts,” said Sean Flynn, senior director of community financial institutions at TransUnion. “At the same time, a consistent trend of rising interest rates over the last year has led many of those same consumers to avoid originating new loans and lines of credit in favor of leveraging existing ones they already have. This has been particularly the case in the mortgage market, where originations are down significantly from where they were one year ago.”

While mortgage balances have grown more than 4% year-over-year (YoY), which incidentally represents the lowest balance growth of credit products as demonstrated in these findings, originations have fallen nearly 60% compared to one year prior. And in this environment of increasingly higher interest rates, variable rate home equity lines of credit (HELOCs) have seen YoY origination declines, down nearly 14% over the period, while fixed-rate home equity loans (HELoans) in contrast, saw a YoY increase in originations of 18%.

Credit Union Originations Are Down for Most Credit Products YoY

ProductTotal Balance Growth (% YoY)Origination Growth (% YoY)Delinquency Rate (Point-in-Time)
Auto Loans5.8%-9.4%1.46%
Personal Loan21.1%-15.5%2.14%

Regarding market share, credit unions continue to maintain a strong foothold in auto lending and HELOCs, at 35% and 37% of new loan originations, respectively – both of these numbers represent increases YoY. Credit unions continue to have the smallest market share when it comes to credit card originations, at 3%. It’s a similar story regarding loan balances, where credit unions have the strongest market share presence in auto (34%) and HELOCs (24%). Worth noting is the growth in personal loan and mortgage balance market share, up to 22% and 10%, respectively.

“Credit unions continue to grow their market presence insofar as auto lending and HELOC originations as consumers seek out competitive rates in this high interest rate economy,” said Flynn. “The relative stability of the delinquency rate among credit union borrowers has played a key role in helping to ensure their rates remain attractive to borrowers relative to rates as a whole.”

Delinquency Stability Extends Across Credit Union Credit Portfolio

Despite the challenges being faced by consumers in this high inflation economic environment, delinquencies continue to remain flat among credit union borrowers, at 0.78% across products in Q2 2023. This represents the second consecutive quarter of modest declines, down from 0.83% in Q4 2022. And while these declines pale in comparison to those seen in other lenders, it’s important to consider that throughout the pandemic, 60+ DPD delinquency rates have remained low among credit union accounts.

Among individual credit products, HELOCs saw the lowest 60+ DPD delinquency rates among credit union borrowers at 0.19%, followed by mortgages at 0.33%. The highest delinquency rates could be seen in bankcards and personal loans, at 0.87% and 1.65% respectively; however each of these has seen slight improvements.

To learn more, visit the Q3 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