MADISON, Wis.–CUNA has released its Economic Update for September.
In the report, CUNA Senior Economist Ligia Vado examines a number of issues, including the scale of the potential effect the lift of student loan forbearance can have on credit union asset quality performance, and initiatives from a couple of credit unions to strategically market and service the Hispanic and Latino market in the U.S. to commemorate National Hispanic Heritage Month.
Report Highlights
Highlights of the report, according to CUNA, include:
- Scale effect of forbearance lift. “CUNA’s analysis indicates that the vulnerability of credit union loan performance to student loan repayment shocks is generally modest. Among credit union mortgage, auto, and credit card borrowers, only about 17% on average also have student loans with any financial institutions.”
- Loan performance. “CUNA’s baseline forecast for delinquency rates and net charge offs is 0.80% and 0.60%, respectively. These projections put both asset quality ratios close to their long-run average rates, and reflect more of a reversion to long-term asset quality than any significant shock from student loan borrowers.”
- Latino buying power. “If the Hispanic community in the U.S. was its own country, it would place fifth in the top ten countries with the largest GDP in the world,” said Vado. One in three Latinos is currently in the prime home buying years (ages 25-44).”
Other Findings
CUNA said Vado’s research using Equifax analytics data sets shows:
- 14% of credit union members with a credit union mortgage also have a student loan with any financial institution
- 15% of credit union members with a credit union second-lien mortgage also have a student loan with any financial institution
- 21% of credit union members with a credit union auto loan also have a student loan with any financial institution
- 16% of credit union members with a credit union credit card also have a student loan with any financial institution
- 19% of credit union members with other credit union consumer loans also have a student loan with any financial institution
Additional Initiatives
The research also focuses on two programs helping credit unions to reach and better serve the Latinx market: Coopera’s Hispanic Outreach Program (HOP) and Inclusiv’s Juntos Avanzamo.
CUNA said notable research on the effect of the adoption of Coopera’s and Inclusiv programs on credit union performance found:
- Credit unions that joined HOP grew their membership 33% more than credit unions that did not.
- Credit unions that received the Juntos Avanzamos designation grew their membership 28.1% more than credit unions that did not.
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