The Irish League of Credit Unions (ILCU), representing over 90% of active credit unions in the Republic, maintains that uplifting credit union lending limits would proffer “immediate and tangible” advantages to house purchasers. This is in view of the robust and escalating appeal for the industry’s house loan products.
The ILCU unveiled latest figures on Tuesday, revealing an upsurge of 10% in the mortgage lending of its members in the quarter ending June compared with the prior quarter, reaching €518 million. According to the data, mortgages now account for 10% of the union’s total lending portfolio.
The same trimester witnessed 110,000 fresh loans given, marking a 21% increase from the prior trimester and exhibiting an annual loan growth of 12.8%. As of June end, the total ILCU-affiliated loan book was valued at €5.74 billion, the highest in over a decade and a half.
Simultaneously, the percentage of union member loans defaulting was at a record low of 2.54%.
ILCU-allied credit unions boasted total assets worth €18.3 billion, with a leap in savings to €15.3 billion.
Taking note of this, the Central Bank is set to later this year deliver a report following a review of its lending setup. Credit unions are optimistic that it will promote the elevation of lending limits given the competitive atmosphere in the Republic’s lending market is still grappling following the exit of both Ulster Bank and KBC Bank in recent years.
The existing regulations, established in 2019, confine house and small enterprise lending to 7.5% of a credit union’s total assets, or 15% for larger unions that present a business rationale to the Central Bank and acquire its approval.
Banks are not subject to the limits that were established in response to the financial crisis, while the sector has expressed concern that these restrictions are inappropriate. A comprehensive assessment of the Credit Union industry in the Republic, carried out last year by global credit union regulators based in the UK, USA, and South Africa, recommended the Central Bank to collaborate with credit unions concerning the strategies they devise from legislature passed the previous year to escalate the movement.
David Malone, CEO of ILCU, highlighted that recent lending statistics, demonstrating that the sector’s overall mortgage loan portfolio has increased to €600 million, are indicative of the vital competition and choices the movement is offering in an oversaturated mortgage market.
Mr. Malone stated: “There is a distinct demand for credit union services, including mortgages. Altering the lending limits could provide immediate, significant advantages for would-be homeowners throughout Ireland. Therefore, we anticipate that the Central Bank of Ireland will publish a report on the review of the lending framework by the year’s end, which is an initiative we fully support.”
During the last quarter, the digitalisation process for ILCU-affiliated credit unions intensified. Over the past year, digital transactions have seen a 30% surge and have risen by 400% in the past five years, reaching a total of €2.3 billion, according to the organization.
Mr. Malone asserted, “We provide a digital platform when desired and offer in-person services when required. This integrated approach is what distinguishes us from other financial institutions and fosters our growth.”