TransUnion Report Shows 2023 Credit Union Data Shifts

Data from TransUnion shows that rising interest rates have pooped the credit union account origination party. The newly released Q3 Credit Union Market Perspectives Report can be viewed here.

Interestingly, borrowers continue to take advantage of existing credit lines as balances across most credit products continue to grow, with personal 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 four per cent 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 the same point in 2022. 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. In contrast, fixed-rate home equity loans (HELoans) saw a YoY increase in originations of 18%.

Despite the challenges consumers face in this high-inflation economic environment, delinquencies 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 compared to those seen in other lenders, it’s essential to consider that 60+ DPD delinquency rates have remained low among credit union accounts throughout the pandemic.

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 bank cards and personal loans, at 0.87% and 1.65%, respectively; however, each has seen slight improvements.

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