CUs’ share of consumer credit falls to 9.5%

Feb. 9, 2010 – Overall consumer credit lending for financial institutions proved more resilient than expected in December, but credit unions’ share of the consumer credit market fell from 9.52 percent to 9.5 percent, according to Federal Reserve data.
 
NAFCU Chief Economist Tun Wai pointed out that this was the 11th consecutive monthly decline in consumers’ pace of borrowing. “However, the data provided a marked contrast to November’s monthly decline, which was $21.8 billion after being revised down,” he said.  “December’s consumer credit was still tepid, but it was night and day from the previous month.”

The Fed reported Friday that total consumer credit, a measurement which does not include loans secured by real estate, fell in December by $1.7 billion to $2.46 trillion on a seasonally adjusted, annualized basis. A key factor keeping December’s decline marginal was stronger-than-expected nonrevolving credit, which surged by $6.8 billion to $1.59 trillion on a seasonally adjusted, annualized basis. Meanwhile, revolving credit fell by $8.5 billion to $866 billion, annualized.

At credit unions, total consumer credit lending fell from $237 billion to $236.4 billion on a non-seasonally adjusted basis. Revolving credit increased from $34.6 billion to $35.5 billion; nonrevolving credit declined from $202.3 billion to $201 billion.

Regarding the latter, Wai pointed said credit unions are much more active with used-vehicle lending than they are with new-vehicle lending. “December was a month that saw dealers put very attractive terms on new-auto loans. Needless to say, there weren’t too many credit unions that benefited from that.”

Over the months ahead, Wai said he expects consumer credit to remain volatile even as consumer spending continues to improve slowly. “Credit remains limited for a lot of consumers, and that is unlikely to change much anytime soon,” he said. “Given current conditions, credit unions should not expect to see significant growth in either revolving or nonrevolving loan portfolios anytime soon.”