Central Bank of Ireland
DUBLIN, Ireland–The Credit Union Development Association (CUDA) has delivered its submission to the Central Bank of Ireland ahead of its review of its macro prudential mortgage measures it is proposing.
According to BusinessWorld.ie, CUDA is seeking to have the long-term credit union lending limits removed or substantially changed as it believes that they are unduly restricting competition in the mortgage market.
The trade group said that credit unions are massively under lent with billions of Euro currently available, and further contend that delivering greater competition to consumers could finally see standard variable rates (SVR) drop below 3%.
In addition, BusinessWorld.ie reported that CUDA is calling for a change in the loan-to-income (LTI) limit which currently stands at 3.5. CUDA plans to ask the Central Bank of Ireland (CBI) to allow for a slight increase in the LTI – to allow people to borrow up to 3.75 times their income.
The Solution Centre, a CUDA managed innovation business unit, has researched the issues in anticipation of a new mortgage offering and believes that this relatively small change could significantly boost the number of couples on average income that qualify for a typical starter home particularly in Dublin where prices are so much higher, according to BusinessWorld.ie.
CUDA said it believes that the mortgage lending limits in Dublin and other large urban areas need to reflect that it is a wholly different market to the rest of the country, with much higher purchase prices and far higher rental prices.
"We believe that credit unions shouldn’t be unreasonably prevented from delivering competition to drive down mortgage rates,” said Kevin Johnson, CEO of CUDA. “The current credit union limits are arbitrarily capped at 10% of all lending, a crude measure introduced many years ago that is now out of date. The Central Bank has indicated its desire to see more competition in the mortgage market; we believe that this is the best way to achieve it."