By Sherry Virden, CreditUnions.com; This is part of the Callahan Financial Performance Series.
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The nationwide affordability crisis has become an inescapable issue for credit union members, affecting how they borrow, spend, and plan for the future.
From housing and vehicles to education and everyday essentials, the cost of daily living is on the rise, leaving many households struggling to save, qualify for loans, and manage debt.
In today’s economy, it is essential that credit unions balance member support with sustainable lending practices that ensure continued operations for those in need.
Housing Prices Reposition The Real Estate Portfolio
Housing prices are climbing faster than wages in many regions, and members are struggling to save for down payments, qualify for mortgages, or comfortably manage monthly payments if they do buy.
At the same time, other residential real estate products — namely HELOCs — have surged. Existing homeowners are increasingly tapping equity for not only home improvements but also to pay down student loans, consolidate high‑interest debt, and cover unexpected expenses.
New Pressures Drive New Lending Plays
Higher sticker prices, rising interest rates, and longer loan terms mean monthly car payments now consume a larger share of already-strained household budgets for longer.
Considering the affordability concerns with new cars, used auto — traditionally the more budget-friendly option — remains the dominant vehicle loan. However, even the average used car loan balance has increased 3.0% at credit unions since last year, suggesting new loans for used auto are larger than they used to be. That can be a major barrier for members in need of new transportation.
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