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News Now

CU System
Home Equity Loans on Rise According to CUNA Monthly Estimate
MADISON, Wis. (1/6/14)--Optimistic consumers and rising home prices equaled higher home equity loan growth in November according to the Credit Union National Association's monthly sample of credit unions.

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"We're seeing a nice turnaround in home equity loans," said Steve Rick, CUNA senior economist. After years of deleveraging and paying down debt, consumers are starting to borrow, he said.

S&P/Case-Shiller home price indexes, released Dec. 31, collectively rose 13.6% in October (See Jan. 2 News Now, Monthly Increase in Home Prices Highest Since '06.)

With home prices rising, there is equity available for homeowners to tap into. The monthly credit union estimate report said home equity loans grew 0.4% in November. "It means good things for the economy," he said.

Rising mortgage rates are prompting the upward movement in adjustable-rate mortgages, which led November loan growth at 1.1%. Fixed-rate mortgages declined 0.04%.

Overall, loans continue to do well, with 0.3% growth in November. Right now, CUNA is forecasting about 6.5% in loan growth for the year ending 2013 and more than 7% in 2014, Rick added. "We could see one of the best years in loan growth with a stronger economy and consumer confidence going up," he said.

Credit unions also are picking up market share in new auto loans, which increased 0.4%.

"Earnings aren't coming in as strong as we'd like to see," Rick said, which resulted in a slowdown in capital growth. November's year-over-year number was 4.3% compared with 7.9% for November 2012's year-over-year.

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The November loan-to-savings ratio of 69.8% decreased 0.4% from October because of the extra payday in November, said Rick. "Everybody got paid on that Friday, and the savings went up," he said.

Credit union savings balances grew 0.8% in November compared to a 0.3% increase in October. Share drafts had the greatest increase of 4.5%, while one-year certificates, regular shares and money market accounts ticked upward. Individual retirement accounts declined 0.1%.

Asset quality remains strong as shown by the 60-day-plus delinquency rate that has been at 1% for the past nine months.

Credit union membership grew to 98.3 million--a 2.5% increase from November 2012 and year-to-date growth of 2.4%.
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