Credit union loans jump as demand for retrofitting and mortgages grows

Despite mortgage growth, sector remains mostly focused on unsecured lending

The Irish League of Credit Unions (ICLU) said the total loan book of its members soared almost 12 per cent to €5.3 billion in the year to September, amid growing demand for credit to retrofit homes to improve energy efficiency and as the sector moved further into the mortgages market.

The industry body represents 92 per cent of active credit unions in the State.

The combined mortgage portfolio of the movement increased by 50 per cent to almost €500 million, as it took advantage of the exits of Ulster Bank and KBC Bank Ireland from offering home loans, while non-bank lenders turned more cautious as their borrowing costs surged in international capital markets.

However, credit unions remain primarily unsecured personal lenders. Loans are typically used to help with household improvements, retrofit homes, buy a car, pay for a wedding or cover medical costs.


The percentage of customer savings put to work to finance loans rose to 35 per cent from 32 per cent a year earlier, it said.

The overall loan arrears ratio stood at 2.7 per cent for 12 months under review, down from 2.8 a year earlier and marking a new record low, it said, even as families grappled with the cost-of-living crisis.

“Annual lending growth is now at a 10 year high of 12 per cent and our market share of the unsecured personal lending market has increased to a phenomenal 44 per cent,” said David Malone, chief executive of ILCU. “This growth has been achieved with sound prudent management maintaining record low arrears [of 2.7 per cent] and increased capital reserves well in excess of capital requirements.”

The Irish Central Bank eased some of its lending restrictions in early 2020 to allow credit unions to engage in more long-term lending, including home mortgages and business lending.

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The total commercial loan book of ILCU members increased by 12 per cent to €152 million in the year to September.

Draft legislation allowing greater co-operation within the sector passed through its final stage in the Seanad on Tuesday in advance of it ultimately being passed on to President Michael D Higgins for final approval.

The Credit Union Development Association estimates that credit unions’ mortgage lending volumes will double each year “for the next couple of years” at least as a result of the legislative overhaul.

Mr Malone said that the incoming laws will allow the movement to “build on our growth, increasing our national footprint in mortgages and commercial lending”.

There are 200 credit unions in the Republic — down from 428 at the end of 2006, on the back of a wave of consolidation. However, more than 400 branches remain across the State, according to the Department of Finance.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times