DUBLIN, Ireland–Ireland’s credit unions could become significantly bigger players in the mortgage market in this country with the introduction of the Credit Union (Amendment) Bill that will allow CUs to double the amount of mortgage and commercial lending they currently do.
The reforms are being led through Ireland’s Dáil, or lower house, by junior finance minister Jennifer Carroll MacNeill.
As CUToday.info has reported, Ireland’s credit unions operate under restrictions that would make many U.S. CU leaders chafe, and have an industry average loan to share ratio in the 20% range. According to Business Plus, the country’s CUs have more than a combined €20billion in savings, and due to regulations are currently only allowed to lend out 7.5% of their assets.
The new reforms will allow different CUs to band together and pool their resources in corporate groups of credit unions, who will be able to lend out 15% of their total assets, according to Business Plus.
“The government hopes the move will provide real competition in the mortgage market, which is dominated by a handful of banks and financial institutions,” the report stated.
‘Most Trusted Brand’
Added MacNeill, “When it comes to interest rates for mortgages, credit unions are very competitive. They don't have to borrow in the wholesale market, which means their rates are similar or sometimes lower than the banks…Credit unions can play a key role in building an alternative retailing bank sector. This is particularly the case in rural Ireland where banks are leaving and credit unions are expanding. They can act as a great counterweight to the retail banks. They are the most trusted brand.”
The total credit union mortgage portfolio in Ireland is currently just €364 million, while the average credit union mortgage is €100,000, Business Plus reported.
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