NEW YORK—Credit union credit card loss rates will reach “uncharted territory” and auto loan losses will exceed those incurred during the Great Recession, predicted Moody's Analytics during a recent webinar analyzing the impact of COVID-19 on credit unions.
Moody's Analytics expects auto and unsecured balances at credit unions to decline, noted Keith Leggett, the former senior vice president and senior economist at the ABA, who offered his insights on the takeaways from the webinar.
For example, mortgage balances are expected to grow, and credit union default rates on consumer loans will trail initial unemployment claims by six months to one year.
“This would mean loss rates will peak toward the end of this year or in the first half of next year,” stated Leggett.
Gross loss rates on auto loans at credit unions will peak at around 3.5%, which will be above loss rates during the financial crisis, Leggett added.
According to the webinar, loss rates on credit cards will be in “uncharted territory,” and will come quickly, especially at the largest credit unions.