Dáil Éireann Debate, Thursday - 29 September 2016
79. Deputy Michael McGrath asked the Minister for Finance the number of credit unions that have expressed an interest in providing mortgages to members; and if the Central Bank has any knowledge of the type of demand there might be for mortgages from credit union members. [27883/16]
Amharc ar fhreagraMy role as Minister for Finance is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions.
The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions. Within her independent regulatory discretion, the Registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect the savings of credit union members.
I have been informed by the Central Bank that currently credit unions may provide mortgages to members subject to the maturity limits contained in the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 (2016 Regulations) which sets out the percentage of a credit union's loan book that can be outstanding for periods exceeding both five years and ten years, as well as limits on the maximum outstanding liability to an individual member. Under the 2016 Regulations, issued at the beginning of January, credit unions continue to be allowed to lend up to 30% of their loan book over five years and up to 10% of their loan book over 10 years, subject to a maximum maturity of 25 years. In addition, credit unions can apply to the Central Bank for an extension to their longer term lending limits (up to 40% of their loan book over 5 years and up to 15% of their loan book over 10 years). Approval is subject to conditions set by the Central Bank. I have been informed that 12 credit unions have been approved for an extension to their longer term lending limit.
Credit unions are not required to seek specific approval from the Central Bank to provide mortgages, thus the Central Bank does not have specific data on the number of credit unions that have an interest in providing mortgages. However, there is some anecdotal evidence that credit unions may have an interest in providing such loans. Credit unions may express an interest in providing mortgages in the context of on-going engagements with the Central Bank. Additionally, discussions in the Sector Stakeholder Dialogue have indicated an interest in this area.
As the Central Bank does not engage directly with credit union members it therefore would not have knowledge as to what kind of demand there might be for mortgages from credit union members.
The Central Bank considers that credit unions must have appropriate systems, controls and expertise to undertake such lending and is of the view that scale is an important factor in determining whether a credit union can put these in place and offer mortgages as a viable business line. The Central Bank informs me that there are currently some sectoral initiatives in relation to the provision of mortgages being discussed with sector stakeholders.
