FF believes there is huge potential for the credit union sector to issue home loans and assist in meeting a major social need, housing. New information provided by the Finance Minister reveals that the total amount of outstanding CU home loans at the end of March was around 5,000 mortgages worth a combined €106.5 m.

This represents approx 2.6% of the total loan book of the Credit Union sector and less than 1% of their deposit base.  The total residential mortgage market in Ireland is €100 bn with a further €26 bn in buy-to-let loans outstanding.

Credit Union mortgage lending is a drop in the ocean, in terms of the overall mortgage market but there’s massive scope for increased long term mortgage lending within the sector.

Some larger credit unions are already directly writing home loans. Where the expertise exists for the associated underwriting, credit unions should be facilitated in this regard. It may be necessary to review the current 10% limit on long term lending to allow this to develop further.

In other cases, it may be more advantageous for CUs to work together to undertake mortgage lending so that the cost of administration can be shared. They could also become involved with Approved Housing Associations by providing funding to support the work they undertake. However, this will require legislative and regulatory amendments to be put in place. In other countries,  credit unions and similar community based banks already play a positive role in house lending – given the housing crisis in Ireland, this untapped potential should be investigated immediately.