Demand for Personal Loans Pressures CUs, Banks, Fintechs

Source: American Banker

Banks were already under interest rate pressure on personal loans from firms including SoFi and Marcus, and new data reveals that credit unions are also taking a larger chunk of that lending pie.

Credit union loan balances rose 2.3% in May and unsecured personal loans led the way with 3% monthly growth, according to a report that CUNA Mutual Group, an insurance and financial services company that monitors the credit union industry, published this month. 

"Many credit union members are taking on debt before interest rates rise further [to combat inflation] and to consolidate other loans. We expect this trend to continue for the next six months before slowing in 2023, when interest rates will be reaching their peak," said Steve Rick, chief economist for CUNA Mutual Group.

Unsecured lending grew 13% in the first six months of 2022, compared to 0% annual growth in the first six months of 2021, Rick said.