Credit unions are benefiting from economic improvements such as increasing new home sales, rebounding consumer spending, and a pickup in manufacturing. But even as they reap the benefit of more financially stable members, cooperatives are further propelling economic growth in their communities.
More than 1 million new members flocked to credit unions in the past year, according to data from Callahan & Associates’ Peer-to-Peer Software. The industry’s 7,105 credit unions originated $56.3 billion in first mortgages and claimed 7.6% of the market, a record first six months of the year. The industry also reported strong growth in business lending and reversed its new auto loan declines to positive growth.
Credit unions are using improved bottom lines to prod improvements in struggling economic sectors. Nationwide, the unemployment rate was 8.3% in July, with 12.8 million people looking for work, according to the U.S. Bureau of Labor and Statistics. Housing starts are at a four-year high, but still not back to pre-recession levels, and foreclosure rates, while dipping slightly the first half of the year compared to the same six months in 2011, are still significant. One of every 686 homes had a foreclosures filing in July, according to RealtyTrac, a foreclosure research firm based in Irving, CA.
Credit unions, in their roles as economic drivers, are boosting entrepreneurialism through increased business lending, filling a demand for smaller business loans that larger institutions often don’t reach. They’re driving business to mom-and-pop shops through custom credit card rewards programs that encourage consumers to buy local, and they’re organizing “cash mob” mass shopping events at locally owned stores. They’re boosting employment rates by sponsoring job fairs and offering Gen Y valuable management programs that keep their careers promising amid dire unemployment rates for that generation. And credit unions are even improving the housing market by stemming foreclosures with refinancing opportunities and tailored mortgage products as they look beyond members’ credit scores for reasons to lend.
In this slowly recovering economy, credit unions are proving they are working for the betterment of their communities.
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