The credit union movement has moved a step closer to entering the mortgage market, following a vote at the annual general meeting on the Irish League of Credit of Credit Unions (ILCU) at Citywest in Dublin over the weekend.
Member institutions have voted to make funding available to develop a centralised administrative service for mortgage-lending applications. It is anticipated that the structure could be in place later this year.
Under the model approved by institutions, member credit unions will offer mortgage loans to their members and will be responsible for the lending decision, but will receive centralised support with administration.
The ILCU says the vote will “pave the way for credit unions to become significant players in the mortgage market”. The league also said it will continue to campaign for an extension of the €550 million cap on credit union mortgage lending that would apply under current regulations.
"Expanding loan services to encompass mortgages has been a priority area for credit unions for some time and is directly in response to significant demand from credit union members," said Ed Farrell, the league's chief executive.
“Credit unions will play an important role in diversifying the current mortgage-lending market, which is sorely lacking in competition. Credit unions can now begin to realise their full potential – and provide a viable alternative to current mortgage lenders in a more significant way,” he said.
Risk management
Member institutions also voted at the agm to further roll out a risk-management and compliance system. Charles Murphy of Slane Credit Union in Meath was voted in, as the new ILCU president.
The meeting was presented with a report by Dublin City University academic Ciarán Mac an Bhaird that claims consumers will benefit from increased competition if credit unions enter the mortgage market.
Michael Noonan, the Minister for Finance, has previously said he has no objection "in principle" with larger credit unions offering mortgages to their members, as long as he is assured that members' savings are safe.
