The Credit Union National Association (CUNA) released their Monthly Credit Union Estimates report for the month of May finding that loans outstanding grew 0.6% in May. Loan growth was 0.5% in April and auto loans came in at 0.6% growth. The highest growth came from the other mortgage loans sector which had 1.9% growth in May.
Credit Union loans reached $1.08 trillion on the month, with 13.7% new auto loans and 21% used auto loans.
The report included 5,550 credit unions in the nation. Loan growth grew 6.8% on the year, but is down from 9.6% from between May 2017 and May 2018. The report found that loan growth has slowed significantly, down to levels that have not been seen since before 2013.
CUNA reports that economic uncertainties are rising and that the risk of a recession is also on the rise. Consumers have lowered their loan applications as fears of a recession loom. CUNA does not predict a recession in the next two years.
There was a significant weakness in car loans which make up over 34% of the $1.08 trillion in loans when accounting for new and used auto loans. New car loans rose to $148 billion, up 6% while used car loans rose 5.8% to $227.1 billion.
Year-to-date growth is a concern, with new loan balances down 1.1% to mark the first decline since 2011.
Used car loans were at 5.3% growth a year earlier and are now down to about 2% growth year-to-date.
Total real estate loan balances rose to $533.1 billion in May, up 7%.
Car loans are causing trouble for many Americans, with 7 million Americans 90 days or more overdue on their auto loan payments. The figure is higher than when the financial crisis hit and is the highest on record. Economists are concerned that the delinquency is a red flag indicating that Americans, despite lower unemployment, are still struggling to pay their bills.
Car loans are often one of the last loans that Americans go delinquent on because a vehicle allows borrowers to get to and from work and also can be lived in during a worst-case scenario. The sign of higher delinquency rates is a signal of duress for low-income families that may be working more often, but are still unable to afford their lifestyle.
The New York Fed also states that there were 1+ million more borrowers classified as “troubled borrowers” at the end of 2018 than even in 2010 when unemployment hit near 10%.