MADISON, Wis.--Credit unions are poised for stronger growth through the remainder of 2026 as improving earnings, rising capital levels and healthier liquidity position the industry to expand lending despite lingering concerns about consumer credit quality and a slowing economy, according to TruStage's latest Trends Report.
The forecast from TruStage projects credit union loan growth will accelerate to 5.5% this year, up from 4.6% in 2025, with much of that growth expected to come from mortgages, home equity lending and business loans. The outlook reflects a notable shift away from auto lending, which has remained under pressure from elevated vehicle prices and growing levels of negative equity among borrowers.
The improving lending environment comes as credit unions continue to rebuild financial strength. TruStage expects the industry's net worth ratio to climb to 11.4% this year while return on assets rises to 0.80%, giving institutions greater flexibility to compete for loans and deposits. At the same time, analysts warned that delinquency rates remain above historical norms, suggesting credit unions will need to balance growth opportunities against ongoing credit-risk challenges.
Total Lending
Credit union loan balances rose 4.6% in 2025, significantly better than the 2.8% pace set in 2024. Driving overall loan growth was strong growth in home equity loans (which contributed 1.1 percentage points to the overall 4.6% growth rate), business loans (which contributed another 1.1 percentage points to overall loan growth), adjustable-rate mortgages (which contributed a 1.0 percentage point to overall loan growth) and fixed-rate first mortgages (which contributed 0.9 percentage point to overall loan growth). Consumer installment credit, (auto loans, credit card loans, personal loans) contributed very little to loan growth in 2025.
New auto loan balances actually fell in 2025 and used auto loan balance growth was very anemic. Expect credit union loan balances to rise 5.5% in 2026, better than the 4.6% in 2025 but below the 7% long run average. Four factors will contribute to the higher loan growth rate in 2026.
“First credit unions should experience better deposit growth this year which will improve their liquidity and therefore their lending capacity and ability to lend. Second, better loan performance as measured by lower loan delinquency and charge off rates will entice some credit unions to loosen their lending standards. Third, higher credit union capital-to-asset ratios will allow for higher levels of credit risk in the form of additional lending. And finally, potentially lower short-term interest rates by the Federal Reserve by the end of the year could increase members’ demand for loans,” stated TrusStage Chief Economist Steven Rick.
Consumer Installment Credit
Credit union credit card balances fell 1.9%, on a seasonally-adjusted annualized rate in September and below the 5.5% long run average, as higher interest rates discouraged borrowers from carrying a balance and economic uncertainty reduced consumers desire to go further into debt.
The slowdown in the growth rate of consumer credit outstanding demonstrates one of the channels of restrictive monetary policy, i.e., high interest rates reducing credit creation. During the first nine months of 2025, credit union consumer installment credit fell 1.0%, which is slightly less than the 1.9% drop reported during the first nine months of 2024, the report states.
Overall credit union loan growth rose by only 3.8% so far this year, which is still better than the 2% growth rate reported in the first nine months of 2024. For all lenders (banks, credit unions, finance companies) outstanding consumer credit rose by only $4.2 billion in November, according to the Federal Reserve, which is much lower than the average monthly pace of $15 billion growth reported during the years 2015 – 2019. This data series is known, however, for its significant volatility. Expect growth in consumer credit to rise in 2026 due to modest job growth, financial markets deregulation and falling interest rates.
Vehicle Loans
Credit union new auto loan balances fell 5% in December, on a seasonally-adjusted annualized basis, and has been in negative territory since August 2023, due to high amortization of existing loans originated in the boom years of 2021 and 2023, high lending interest rates, low consumer confidence, recession fears and tighter lending standards reducing the availability of credit.
New vehicle sales rose 3.7% in March from February to a 16.3 million seasonally-adjusted annualized sales rate but were down 8.7% from the pace set one year earlier. The large year-over-year decline reflected the base effects from pre-tariff buying in March 2025. The 3.7% jump in new car sales in March were due to stronger income growth, a 3.8% increase in average wages, greater vehicle inventories making it easier to buy a new vehicle and stable loan interest rates.
Despite the improved new auto market in March, sales are still below the assumed market equilibrium of 17 million car sales due primarily to persistently high new car transaction prices. Moreover, declining used-vehicle values are leaving consumers with less equity from their trade-ins making the purchase of a new vehicle out of reach for many consumers.
Currently 30% of borrowers hold negative equity in their vehicle loans with the average around $7,200. This “underwater” situation is causing borrowers to roll previous loan balances into new loans, which is straining their purchasing power and financing $12,000 more on average than a typical new car buyers, the report states.
“For 2026, we expect new auto sales to fall from 16.1 million in 2025 to 15.8 million. This 1.9% decrease is due to weak job growth, higher auto loan rates, rising new car prices, rising gasoline prices placing financial strain on households, rising risk of recession the longer the war with Iran continues and consumers preference for used vehicles over new ones,” Rick said.
Real Estate Information
Credit union fixed-rate, first mortgage loan balances rose 4.9% at the end of 2025, at a seasonally-adjusted annual rate, better than the 1.4% pace reported in December 2024. The jump in mortgage loan balances was due to the fall in interest rates. The contract interest rate on a 30-year, fixed-rate conventional home mortgage fell to 6.19% in December, from 6.24% in November 2025, and below the 6.72% reported in December 2024.
When comparing full year growth data, credit union fixed-rate first mortgage balances rose 2.9% in 2025, above the 0.1% reported during 2024. Home prices rose 0.2% in January 2026, according to the S&P Core Logic Case-Shiller Home Price Index and rose 0.9% year-over-year despite the worst housing affordability in almost 40 years.
In the five years preceding the pandemic the average monthly price appreciation was just over 0.4%. But today the demand for homes is weak amid extremely low housing affordability which is weighing on home prices. Existing home sales are near their lowest level since the Great Financial Crisis. High interest rates have reduced housing demand to recessionary lows, but a simultaneous low level in housing supply is keeping home prices from declining, the report explains.
“Current homeowners have a strong incentive to stay in their homes because of the large spread between the effective mortgage rate and the current mortgage rate. The effective mortgage rate, which is the average rate on all outstanding mortgages, is almost 200 basis points below the current mortgage rate. Following years of higher-than-average home price growth, the housing market appears overvalued. So, expect home price appreciation to slow to 0% -1% in 2026,” Rick said.
Savings And Assets
The personal savings rate (personal savings divided by disposable personal income) averaged 4.7% in 2025, below the 5% long run average, which created a headwind for credit union deposit growth. More recently, in February 2026, consumers saved only 4.1% of their disposable income, down from the 4.9% reported in February 2025, (see figure above).
Today's low savings rate comes on the heels of the high savings rates reported during the COVID-19 pandemic in 2020-2021 when consumers spent less on leisure and hospitality and received three rounds of government stimulus checks. Consumers typically used 80% of their stimulus payments to either pay down debt or to build up their precautionary savings balances.
Expect the personal savings rate to rise to 5% later in 2026, due to members’ having exhausted their excess savings built up during the pandemic and rising volatility in the equity markets. The drop in the personal savings rate is one factor pushing up long-term interest rates recently.
Financial institutions used the surge in savings deposits to purchase additional government debt. This increased the price of bonds and reduced the interest rates on those bonds. The recent drop in the savings rate, however, slowed the growth in credit union and bank deposits and therefore the funds available to purchase additional government debt which raises interest rates, the report explains.
Equity And Other Key Measures
The credit union movement’s equity-to-asset ratio ended 2025 at 10.4%, up from the 9.7% reported at year end 2024, as net income grew, and credit unions experienced less losses on the market value of available-for-sale investments. Credit union equity (Other Reserves + Undivided Earnings + Unrealized Gains/Losses on Available for Sale Securities) rose $27.9 billion in 2025 due to less losses on securities ($10.9 billion) and higher net income ($16.9 billion).
The numerator of this ratio (equity) rose 6.7% in 2025, while the denominator (assets) rose only 6.3%. The net effect was a 7.2% rise in the equity-to asset ratio from 9.7% to 10.4%. Credit union earnings as measured by return-on-asset ratios came in at 0.76% in 2025, up from 0.61% in 2024 but below the 0.78% long run average.
The gain was due primarily to higher net interest margins more than offsetting higher operating expenses. Credit unions reported a return-on-equity (a.k.a. equity growth rate) number of 6.7% in 2025, below the 7.4% 30-year average. The return on equity ratio is an important measure of credit union financial performance because it is considered the speed limit for asset growth in the long run.
“Credit union equity growth could improve in 2026, if the Federal Reserve continues to lower interest rates later in the year and therefore boosts the market value of available-for-sale investments and reduces the competitive pressure on deposit pricing. Therefore, we are forecasting return-on-asset ratios rising to 0.80% this year due to rising net interest margins, higher fee income and lower loan loss expense,” Rick said.
Credit Unions And Members
Memberships grew at a 2.0% seasonally-adjusted, annualized growth rate in December 2025 an acceleration from the 1.1% pace reported at the end of 2024 but below the 2.5% long run average. Slow consumer loan growth is the major factor contributing to the below trend membership growth.
Credit union memberships rose to over 145.9 million, up 1.6% from one year earlier. Memberships are approximately 43% of the total U.S. population of 342 million. The slowdown in credit union membership growth is due to the very weak growth in consumer installment credit. During the last 12 months credit union consumer installment credit balances rose only 0.3%, significantly below the 6.2 long run average.
The recent membership growth of 1.6% is still faster than the overall U.S. population growth rate of 0.5%. Credit unions added 2.3 million memberships for all of 2025, while the U.S. population rose by 1.8 million (1.3 million from immigration and 0.5 million from domestic births minus deaths). Therefore, credit unions are still picking up market share from banks and other depository institutions.
Membership growth is also driven by job growth. In 2025, the economy added only 116,000 jobs, according to the Bureau of Labor Statistics, down from the 1.459 million reported in 2024, and significantly less than the 2.2 million jobs the economy typically added annually during 2010-2019. For 2026, expect a weak labor market with an expected 0.5 million additional jobs being added to the workplace due to slower immigration. Credit union membership growth is expected to be 1.8% in 2026 and 2.0% in 2027, below the recent 10-year average of 3.5%, due to expected subpar loan and job growth forecasted for the next two years.