ARLINGTON, Va.—Credit unions can still expect strong auto loan growth in 2016, but beyond that they should brace for some lending brake-tapping.
That is a viewpoint delivered in NAFCU’s January Economic & CU Monitor, which looked back and ahead at CU auto loans.
NAFCU noted that as final data is being compiled for 2015, credit union loan growth is on pace to top 10%, and auto lending has been a major factor.
“As of September, vehicle loan growth accounted for 44% of total loan growth over the past 12 months. While current levels of growth are unlikely to be sustained over the long term, demand for auto loans projects to be strong again in 2016,” NAFCU stated.
NAFCU noted that pent-up demand for new cars has fueled auto lending in recent years, adding there are still a large number of buyers who have yet to replace that old car who will do so this year.
Other highlight from NAFCU’s special report on auto loans:
- 2015 was the best year on record for light vehicle sales.
- Car ownership has nearly recovered to pre-crisis levels, with an estimated 1.13 registered light-duty vehicles per licensed driver.
- The Federal Reserve’s increase of interest rates could discourage some auto buyers, but the gradual nature of the hikes and the continued low gas prices will likely mitigate this factor.
Economic Outlook
In this month’s Monitor, NAFCU Chief Economist and Director of Research Curt Long reported that the labor market finished the year on a positive note with 290,000 jobs added in December as well as upward revisions to prior months.
“The Fed is eyeing four quarter-point rate hikes next year, but that depends crucially on evidence of building inflation,” he said.