Credit Union lending increased by over £250m in the past year

Analysis of the Bank of England’s latest data on Credit Unions from independent financial services consultancy Broadstone has demonstrated the growing demand from households for affordable credit solutions.

There are 2.14 million adult members of Credit Unions in the UK as of Q3 2024, an increase of 86,543 compared to a year ago with 2.06 million members recorded in Q3 2023. Over a five-year period, Credit Union membership has increased by over 260,000 from 1.89 million in Q3 2019.

The pace of lending has also seen consistent increases lately with loans to members rising by over £250 million from £2.34 billion in Q3 2023 to £2.61 billion in Q3 2024. Again, the growing role of Credit Unions is even more apparent over five years with lending increasing by nearly £1 billion from £1.63 billion in Q3 2019.

Credit Unions are not-for-profit financial cooperatives providing banking services but differ from traditional banks as you become a member rather than a customer, similar to building societies. Membership is based on a common bond – typically region or profession.

They are valuable for individuals struggling to access mainstream credit as many Credit Unions have a social mission to support and offer an alternative to high-cost credit.

Richard Pinch, Senior Director, Risk, at Broadstone, said “Adult membership of Credit Unions has expanded significantly over the past five years and is continuing its upward trajectory.

“This growing demand reflects the importance of institutions that enable access to the mainstream lending sector. This is particularly true for those who feel locked out of the market, including individuals with a credit profile or income status that does not fit with traditional ratings and risk management frameworks.

“Credit Unions are one of the country’s best-kept secrets for potential borrowers, providing secure and responsible lending as well as rates that are affordable relative to many other high-cost, short-term options. Another bonus of Credit Unions is that they offer attractive rates to savers, who also benefit from the knowledge that their deposits are helping to provide loans for other members. These savings are also protected to £85,000 by FSCS.

“Moving forward, access to technology such as Open Banking and increasing integrations with financial services aggregators should support the continued growth of Credit Unions and enable them to compete against larger lenders.”