ALEXANDRIA, Va.–NCUA’s chief economist is cautioning that while the strengthening economy is good for credit unions, there is still uncertainty about the economic outlook and future path of interest rates.
NCUA Chief Economist Ralph Monaco shared that view and others on economic conditions and the possible impact of rising interest rates in NCUA’s latest Economic Update YouTube video, which is available online here.
“We’ve entered a new interest rate environment, where rising rates, both short- and long-term, are more likely,” Monaco said. “Now is a good time for credit unions to evaluate income and balance sheet changes across a range of potential interest rate scenarios, including one that looks like the Federal Reserve’s projection.”
Credit unions are benefiting from the rise in demand for big-ticket consumer goods, like autos and houses, noted Monaco. Auto sales were well above the pre-recession average in the third quarter of 2015. Home sales remain at a relatively high level. Both are an important for credit union lending, accounting for almost 85% of the credit union system’s loan portfolio.