Lending limits are “not the barrier” to more credit unions offering mortgages says the regulator of credit unions at the Central Bank, who has cautioned the sector against calls for further capacity.
This was heard at the recent Irish League of Credit Unions’ (ILCU) 2022 annual conference in Belfast where Patrick Casey, the registrar of credit unions at the Central Bank, made the comments.
This past March it commented that lending rules had limited credit unions to just 3pc of the mortgage market and less than 10pc of the small business loan market. The ILCU added that credit unions had €15bn of surplus funds.
Casey went on to say that total house loans outstanding by credit unions were valued at €260m, or 10% of maximum capacity, and business lending was €128m, or 5% of capacity, as of the end of September 2021. He added that 99 credit unions, roughly half of them, had decided not to engage in house lending.
He cautioned against calls for additional lending capacity to be made available, adding that the scale of unutilised available capacity was at 90-95%.
“The commercial reality is that it is simply not enough just to have the surplus funds available for house loans. Credit unions must have more advanced competence and capability to compete with others for market share. You still need to build a compelling mortgage proposition which attracts borrowers – one that delivers a sustainable return for the credit union over the economic cycle. This is not a regulatory challenge, but a commercial one.”
Casey said the Central Bank wanted to see a strong sector.
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