Credit union loans ‘not limiting barrier’ to more mortgage offers, says central bank


The credit union regulator at the Central Bank has said loan limits are “not the barrier” to more credit unions offering mortgages, warning the industry against calls for extra capacity.

Atrick Casey, the Registrar of Credit Unions at the Central Bank, made the comments during an address at the Irish League of Credit Unions (ILCU) 2022 Annual Conference in Belfast yesterday.

The ILCU is a representative body for credit unions across the island of Ireland. In March, he said lending rules limited credit unions to just 3% of the mortgage market and less than 10% of the small business loan market. The body added that the credit unions had 15 billion euros in surplus funds.

During his speech, Casey said total home loans outstanding by credit unions were valued at 260 million, or 10% of maximum capacity, and business loans were 128 million. euros, or 5% of capacity, at the end of last September. He added that 99 credit unions, or about half of them, had decided not to engage in home loans.

Casey insisted that regulatory limits are not a barrier to more credit unions offering home loans. He cautioned against calls for additional lending capacity to be made available, adding that the scale of unused available capacity was 90-95%.

“The business reality is that having the excess funds available for home loans is simply not enough,” he said. “Credit unions need to have more advanced skills and capabilities to compete with others for market share.

“You always need to craft a compelling mortgage proposal that attracts borrowers – one that provides a sustainable return for the credit union through the economic cycle. This is not a regulatory challenge, but a commercial one.

Casey said the Central Bank wants to see a strong sector. He added that the business challenges of credit unions were “well known” and required business responses to reverse the growing gap between members’ savings and loans. He said the sector’s loan-to-asset ratio was around 27%, close to historic lows.

“Without the transition of the business model by credit unions, many will face a real risk of financial viability,” he said.


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