The figures show customers made the choice to improve their returns by placing their funds in money market accounts, which showed a 242% increase with a record $3.4 billion among the area credit unions.
“They’ll have half their members unhappy, trying to find a rate of return (on accounts),” he said. Members who seek larger returns may find the rate of savings is tougher. Members could be glad at first but sad later,” Prag said, explaining how low rates are good for loans but bad on savings rates. “This is a delicate situation for a membership organization. As long as the rates remain low, prospective homeowners and existing residents refinancing will see the need to take advantage of the lending bonus, Prag said.Īlbeit good news for borrowers, the low rates may serve as a bane and blessing.
Low interest rates contributed to this result. All loans totaled $8.4 billion - a 13% increase. The credit union collective processed $8.4 billion in loans, marking a 13% annual rise from 2020.įirst mortgages led the way with a record $4.3 billion in lending funneled through these credit unions - a 29% lift from last year. The other lingering trend economists and financial executives are watching is loan activity. “The (Federal Reserve) is blowing it off, but it’s going to get worse, and we’ll start to see those cash balances going away because prices are going up,” Prag said. Prag warned the rate of inflation may climb to as high as 6% by next year if remained unchecked.
With that kind of government spending, that money could lead to other outcomes that economists are keeping their eye on. Much of that money came in the form of government relief programs designed to keep people afloat during economic restrictions because of the pandemic. “There’s a ton of money in the system waiting to be spent,” Prag said. Jay Prag, a clinical professor of economics and finance at the Drucker School of Management in Claremont near Los Angeles, told the Business Journal that credit union members were likely transferring money dumped into their checking accounts and saving it instead of spending those dollars. This was a record savings of 119% over the same period last year.ĭeposits in checking accounts dropped by 62% in comparison to the previous year. The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.A snapshot view of nine credit unions in Sonoma, Solano, Napa and Marin counties shows double-digit increases in key measures such as deposits into savings accounts and loan activity through the end of March.Īccording to the California and Nevada Credit Union Leagues, which is the Ontario-based association representing the financial institutions, $4.5 billion was dumped in members’ savings accounts at nine credit unions in the greater North Bay area. We have no control over the nature, content and availability of those sites. Through this website you are able to link to other websites which are not under our control. In no event will CU*Answers, its related partnerships or corporations, or the partners, agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information provided or for any consequential, special or similar damages, even if advised of the possibility of such damages.Īny views and opinions expressed on this web site are those of the authors and do not necessarily reflect the official policy or position of CU*Answers or any of its affiliates. All information is provided "as is", with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. This website and included materials are intended, but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as an indication of future results.
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