Credit unions want increased footprint in mortgage market

The Irish League of Credit Unions (ILCU) is calling on the government to make the necessary regulatory changes to enable credit unions to significantly increase their footprint in the mortgage market.

It follows comments attributed to the Minister with Responsibility for Credit Unions, Sean Fleming, in an article in last weekend’s Sunday Independent. He was quoted as saying “credit unions should fill the gap left by the departures of Ulster Bank and KBC from the Irish market and start lending more mortgages”.

In a statement issued this week, the ILCU point out that credit unions want to seize this opportunity but they say they are currently “handcuffed” by restrictive lending limits for mortgages prescribed by the Central Bank of Ireland.

Specifically, mortgage and SME lending is limited to a combined maximum of 7.5% of total assets for most credit unions. For example, a credit union with assets of €70m, taking an average mortgage of €350,000, can only offer 15 mortgages under the current limits, exclusive of any SME lending. If they have SME lending, then the number of mortgages they can offer reduces accordingly within the strict 7.5% lending limit.

Commenting on the issue, ILCU deputy CEO, David Malone, said: “The Programme for Government committed to ‘enable the Credit Union movement to grow as a key provider of community banking in the country’. In order for credit unions to become community banks, and to really engage in the mortgage market, the ILCU is asking Minister Fleming to address the imbalance caused by the restrictive regulatory lending regime in his soon to be published review of the policy framework within which Credit Unions operate.”

He added: “The publication of this policy framework review presents a once in a decade opportunity for the Minister to empower credit unions to realise their full potential in filling the gap left by Ulster Bank and KBC and, in doing so, offering a community based alternative to the remaining banks to the Irish public. The ILCU is ready and willing to constructively engage with Minister Fleming and his officials in achieving this aim.”