Home Info Newsroom Credit Unions Wary Despite Record-Low Delinquencies

Credit Unions Wary Despite Record-Low Delinquencies

Authored By: Lewis Wood on 10/20/2022

Source: American Banker

Credit quality has been historically strong for credit unions, but a couple of the factors driving that — low interest rates and government stimulus checks — have disappeared and credit unions are bracing for a change.

In June, the most recent reporting period available, loan delinquencies for U.S. credit unions hit 0.42%, the lowest level in credit union history, according to a report from CUNA Mutual Group, an insurance and financial services company that monitors the credit union industry. 

Tim Scholten, founder and president of the credit union and community bank consultancy Visible Progress, said one of the major factors behind the strong credit quality has been that money has been cheap and easy to get. But with rising interest rates, inflation increasing and layoffs starting to occur again, the good news is likely to reverse sooner rather than later.

Scholten said credit unions will likely notice a change to their balance sheets as soon as the fourth quarter of this year.  

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