The banking data sees the conditions return to normal. What can UC expect?


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Banks recorded a consistently high level of mortgage loan origins, an increase in auto loanings and an increase in credit card spending last spring.

Second quarter reports show conditions are changing in areas where credit unions operate. About half of their loans are mortgages, a third are cars and credit cards are a significant portion of the rest. The NCUA will begin publishing its reports at the end of the month.

On Tuesday, Ally Financial of Detroit said it issued a record $ 12.9 billion in auto loans in the three months ending June 30, up 79% from the previous year, up 26% from March 31 and 33% from June 30, 2019 was $ 2.2 billion, up 80% from the previous year.

Ally CEO Jeffrey J. Brown said credit trends remain encouraging, with conditions returning to more normal levels over the next 12 to 18 months.

“Consumers’ balance sheets remain healthy,” he said, “increasing their ability to borrow and pay”.

Van Hesser, chief strategist at New York’s Kroll Bond Rating Agency, said on Tuesday that gross domestic product would decline from its current annual growth rate of 9% to a rate of 2.3% by the end of 2022.

“We are at an economic inflection point,” Hesser said. “We are emerging from this boom environment fueled by stimuli. An extraordinarily strong economy will now normalize. “

Mortgages. Retail mortgage originals in the three months ended June 30 totaled $ 109.1 billion for Bank of America of Charlotte, NC, JPMorgan Chase of New York, US Bank of Minneapolis, Truist of Charlotte and Wells Fargo of San Francisco.

Second-quarter creations increased 6% year-over-year and 5% year-over-year. Second quarter production was the highest in at least two years for JPMorgan Chase and Wells Fargo.

“There has obviously been a huge boom in refi over the past year with lower prices. It’s starting to slow down a bit, ”said Jeremy Barnum, CFO of JPMorgan Chase. “The buying market has been quite robust, although now we’ve seen so much appreciation in home prices that affordability is perhaps starting to be a bit of a headwind.”

As of June 18, the Mortgage Bankers Association had forecast $ 1.05 trillion in second quarter start-ups, up 13.1% from the second quarter of 2020 and down 4% from the first quarter of this year. .

Auto loans. Ally, Chase and Wells Fargo generated $ 58.1 billion in auto loans in the second quarter, up 23.1% from the second quarter of 2020 and 8.3% from the first quarter.

Auto balances at Bank of America, Chase and Wells Fargo stood at $ 165.8 billion as of June 30, up 5.2% from the previous year and 1.7% from 31 March. Among credit unions, CUNA estimates that total auto loans stood at $ 392.8 billion as of May 30. , up 3.9% from the previous year and 1.4% from March 31.

High prices for cars and homes are deterring some consumers from buying these large items and contributing to their renewed spending on travel and other experiences they missed during the height of the pandemic, Hesser said.

“I wouldn’t expect a significant drop in overall auto assemblies,” he said. “There will be some record highs that we saw in the second quarter due to supply constraints and a bit of sticker shock.”

Second quarter credit card spending was $ 327.6 billion at Bank of America, Chase and Wells Fargo. It was up 49% from the second quarter of 2020, 22% from the first quarter of 2021 and 24% from the first quarter of 2020.

At Bank of America, CEO Brian Moynihan said on his July 14 call that his credit card balances were rising as the increase in spending surpassed high and ongoing payout percentages.

“Spending has accelerated as COVID vaccinations increase, businesses reopen and domestic travel increases,” Moynihan said.

Credit unions do not disclose their card spending volumes, but monthly balances reported by banks, credit unions and others have shown an unprecedented drop in the 12 months after COVID-19 was declared a pandemic in March 2020. These trends started to reverse in April and May, especially for credit unions.

Hesser said combined credit and debit card spending is now 20% higher than pre-2019 pandemic levels, reflecting an unsustainable fiscal stimulus boost. “It’s remarkable,” he said. “We see a lot of dynamism in the American consumer. “

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