TransUnion Report Reveals Credit Union Data Shifts in 2023

According to data from TransUnion, rising interest rates have had a negative impact on credit unions’ account origination rates. The Q3 Credit Union Market Perspectives Report, recently released by TransUnion, reveals that borrowers are increasingly relying on existing credit lines, leading to growth in balances across various credit products.

Sean Flynn, the senior director of community financial institutions at TransUnion, points out that inflation and the cost of living have prompted many credit union members to use credit products to get by. This is evident in the continued growth of balances in existing accounts. At the same time, the consistently rising interest rates over the past year have discouraged consumers from taking out new loans or lines of credit. Instead, they are opting to leverage their existing credit lines, particularly in the mortgage market, where originations have significantly declined compared to a year ago.

While mortgage balances have grown by over four percent year-over-year, representing the smallest balance growth among credit products, originations have dropped by nearly 60% compared to the same period in 2022. Variable rate home equity lines of credit (HELOCs) have also experienced a decline in originations, down by almost 14% over the period. Conversely, fixed-rate home equity loans (HELoans) have seen an 18% increase in originations year-over-year.

Although consumers face challenges in this high-inflation economic environment, delinquencies among credit union borrowers have remained steady. The overall delinquency rate across credit products in Q2 2023 stood at 0.78%, marking the second consecutive quarter of modest declines from 0.83% in Q4 2022. It is important to note that credit unions have maintained low 60+ days past due (DPD) delinquency rates throughout the pandemic, despite the declines being less significant compared to other lenders.

Among credit products, HELOCs have the lowest 60+ DPD delinquency rate among credit union borrowers at 0.19%, followed by mortgages at 0.33%. Bank cards and personal loans have the highest delinquency rates, at 0.87% and 1.65% respectively, although both categories have shown slight improvements.

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