Credit Unions are already allowed to offer mortgages to their members and indeed a number of Credit Unions do. As of March 2019 there were €175 million of mortgages outstanding across the sector.
The amount of mortgage lending Credit Unions can engage in, however, is limited by the Central Bank’s lending regulations for Credit Unions which allow only a certain proportion of a Credit Union’s loans to be long term loans due to lending maturity limits.
These lending regulations have been under review since October 2018 when the Central Bank commenced a public consultation.
Reviewing these Lending Regulations is a very important matter and one for which I have previously outlined my strong support – including in a letter I wrote to Governor Lane in late 2017.
The proposed revisions to the Lending Regulations from the Central Bank contain many positive elements. The proposals change the basis of calculation for the limits from a percentage of loans to a percentage of assets, which is something that the sector has been calling for. The proposals would also allow larger and capable credit unions to do significantly more mortgage lending than is currently the case.
Based on the data supplied in the Consultation Paper, the proposals would allow in the first instance a sectoral capacity of €861 million for mortgages, which should be seen in the context of the €175 million of mortgages outstanding across the sector as of March 2019.
This capacity would increase if applicable Credit Unions are approved for the higher limits. In the case where all Credit Unions with assets greater than €100 million were approved for the higher limit, sectoral capacity could increase to a maximum of around €1.8 billion.
As I mentioned the Consultation Paper containing these proposals was published in October 2018, with the consultation period open until the 9th January of this year. This gave credit unions, their representative bodies, and other stakeholders the opportunity to analyse the proposals put forward in the Consultation Paper and engage in the consultation by submitting their views to the Central Bank. One of the matters being consulted on is the definition of a mortgage, which the Central Bank would propose to exclude commercial or Buy-to-Let mortgages, as is the current practice.
The Central Bank is currently in the process of reviewing the submissions received and expects to publish a feedback statement and draft regulations in the second half of 2019.
Officials from my Department have liaised with the Central Bank regarding the proposals in the Consultation Paper and I will input into the statutory consultation process when it arises.