NEW YORK–A new analysis won’t come as a big surprise to many in credit unions, as it suggests a rise in delinquency rates from out-of-work consumers, less demand for house buying and tighter mortgage restrictions will lead to the U.S. market shrinking in 2020.
Credit unions are actually projecting some growth in mortgages in 2020, driven by refinancings as mortgage rates remain at historical lows.
The report, from GlobalData, forecasts 0.9% growth in mortgage balances for 2020, compared to the previous 3%.
“Consumers being unable and unwilling to view prospective houses will also have an impact on reducing demand for new purchases,” according to the analysis.
“We expect to see approvals for loans tightening across the board, as banks’ liquidity will become stretched,” said Resham Karira, retail banking analyst at GlobalData. “Similarly, consumers will be increasingly wary about taking on extra liabilities due to the increased economic uncertainty.”
Card Forecast
GlobalData said the trends are also reflected in its forecasts for credit card balances. The company said it expects credit card transactions to increase, due to a decline in cash usage, however, overall balances will be hampered by a decline in overall consumer spending.
GlobalData said it has revised down its credit card balances forecasts to -3.2% growth in 2020, from 5.5% previously.
Alternatively, retail deposits are expected to benefit as a result of the risk aversion, it added, as CUToday.info has reported.
“Retail deposits are forecast to benefit from a flight to safety in 2020, and the move away from cash holdings,” Karira said. “However, due to the Federal Reserve rate cut, savers will see little to no returns after inflation.”