WASHINGTON—CUNA’s economists are reporting they sees little impact to credit union loan performance from the lifting of student loan forbearance, according to its latest Economic Update.
Among the key findings in the Update, according to CUNA:
- Scale effect of forbearance lift. CUNA’s analysis indicates 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, stated Senior Economist Ligia Vado
- 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, Vado said
- Latino buying power. If the Hispanic community in the U.S. was its own country, it would place fifth in the top 10 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).
Additional Findings
In addition, 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 institutions
- 19% of credit union members with other credit union consumer loans also have a student loan with any financial institution
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