CHICAGO—As credit union lenders enter the final months of the year, TransUnion data reveal where CUs have been doing the most work to keep the pipeline full.
The TransUnion Q3 Credit Union Market Perspectives report shows that cooperatives have been focused on home equity, as well as lending to the super prime subprime markets.
Through the first half of the year, growth ranged from 2.7% in credit union auto balances up to 14.4% for home equity loan balances as borrowers continue tapping into the equity in their home to make home improvements, consolidate other debt, or pay for other large purchases, like education expenses. Bankcards also saw significant YoY balance growth, up 8.6% over the period, TransUnion said.
“Despite a consumer credit market in which originations for many products remain below levels we saw two years ago, credit unions continue to see their total balances increase as they continue to serve the needs of their members,” said Jason Laky, executive vice president and head of financial services at TransUnion.
Taking a deeper look at credit balances, growth has not been equal among all credit risk tiers. In fact, credit unions are now seeing a greater share of their overall balances being found among consumers in the super prime and subprime risk tiers, while other risk tiers saw their shares decline YoY. Each of these other risk tiers has seen their balance share decline for two consecutive years, TransUnion said.
Interesting Fact
“For credit unions the real interesting thing is balances continue to grow for credit unions despite a suppressed originations market,” said Sean Flynn, senior director of the community financial institutions business at TransUnion. “We continue to see credit unions finding ways to help members wherever possible, despite the number of loans continuing to see a little bit of a decline year over year. They want to find a way to help as many people as they can. But they want to be responsible. They want to make sure the loans they're making are sound. They're safe loans.”
Flynn added that CUs are looking for “hidden opportunities” among their members.
“Think of a consumer who maybe is on their traditional credit file has some rough spots, but has been doing really well with some alternative credit,” Flynn said. “We're seeing credit unions are taking a more holistic view of the consumer, to help as many people as possible. We've seen more of that in the recent 12 to 18 months than we've seen in a long time.”