Irish credit unions have topped €1 billion in mortgage loans for the first time, following strong growth in recent years amid an easing of sector lending constraints by regulators, according to the Irish League of Credit Unions (ILCU).
The league, which represents more than 90 per cent of active credit unions in the country, said the mortgage book of its members jumped 24 per cent to €827 million in the 12 months to the end of June. It estimates that portfolio of home loans across the wider movement reached €1.05 billion.
However, the average new mortgage issued by credit unions in the second quarter of the year, at €155,700, was half the size of the average home loan drawn down in the wider Irish market during the same period. That stood at about €317,700, according to Banking & Payments Federation Ireland (BPFI) data.
The surge in mortgage activity pushed total loans outstanding up 9.6 per cent to €6.84 billion, leaving the sector’s portfolio well in excess of its previous historical peak in 2008, when it stood at €6.21 billion.
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“These latest quarterly results highlight the ongoing trust in credit unions and important role that they play in supporting the ambitions and needs of individuals and communities,” said David Malone, chief executive of ILCU. “This is underlined by the sustained growth in demand across our lending portfolio, recognition that credit unions are progressive financial services providers that are there for people at every stage in life.”
Total assets across ILCU-affiliated credit unions rose 5.3 per cent on the year to €20.1 billion at end of June, while the individual members of credit unions rose by 79,000 to 3.37 million.
The increase in lending has occurred against the backdrop of regulatory and legislative tweaks in the past five years, aimed at improving the viability of the credit union sector.
The Central Bank eased previously highly restrictive limits on long-term lending in 2020.
Laws introduced in 2023 allow credit unions to refer members to peers for services for the first time. They also enable them to club together to provide loans. And they introduced the concept of a corporate credit union – a credit union for credit unions – to support collaboration and pool certain resources.
Last year, the Central Bank gave the credit union movement additional lending flexibility, which, it estimates, would treble the sector’s capacity for mortgage and business lending to about €9.9 billion.
Effective from last September, credit unions, regardless of size, can lend up to the equivalent of 30 per cent of their total assets by way of home mortgages. Business lending can reach as much as 15 per cent of assets.
Credit unions will also not have to submit business plans for certain lending while mandatory monthly performance reporting will also be abolished for specific loan categories.
Five large credit unions joined forces this year to establish a company that is aimed at evolving into a single body to manage treasury functions for dozens of sector players, with a view to boosting mortgage and business lending.
The new company, CU Asset & Liability Management Company, trading as CCU CUSO, has been established as a precursor to a corporate credit union (CCU), subject to the Central Bank of Ireland setting rules for such organisations.
It is expected to be late next year before the central bank outlines the regulations required for CCUs for this section of the legislation to begin.
The five credit unions leading the project are: St Raphael’s Garda Credit Union; Member First Credit Union; Health Services Staff Credit Union; First Tech Credit Union; and Comhar Linn INTO Credit Union.
