The Irish credit union movement has set its sights on securing a 10 per cent share of the Irish mortgage market, following an easing of sector lending restrictions in recent years, according to the chief executive of the Irish League of Credit Unions (ILCU).
David Malone, who has led the league for four years, told members of the Oireachtas finance committee last week that Irish credit unions’ push into the Irish mortgage market has seen the movement build a portfolio of almost €1 billion of home loans.
“We started with a standing of zero only a couple of years ago,” he said, adding that credit unions are aiming to reach a market share of 10 per cent of new mortgages “over the next few years”.
“We want to do that in safe fashion as well, because it is a new form of lending for credit unions,” Malone said. “We’re building up our capabilities and capacity in that. And we see great opportunities.”
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New mortgage lending across credit unions amounted to almost €250 million for the 12 months to the end of September, according to a table in a Central Bank report published last month. That equated to an almost 1.8 per cent share of the total of €14.1 billion in home loans issued in the market for the period, according to figures from Banking and Payments Federation Ireland.
Bank of Ireland and AIB accounted for 71 per cent of mortgage lending in the first quarter of last year, figures from each revealed last week. However, the market is set to face growing competition from PTSB, which accounts for about a fifth of the market, when it is taken over by Austrian bank Bawag and neobank Revolut, which has been working on the launch of an Irish home loans offering for some time.
There were 172 credit unions in the State at the end of September, down from 369 a decade earlier, amid a wave of consolidations supported by regulators.
Mortgages represented 11.5 per cent of the overall loan portfolio of ILCU members at the end of last year, up from 10.1 per cent a year earlier, reflecting a decisive shift in how members are using their credit union.
The increase in lending has occurred against the backdrop of regulatory and legislative tweaks in the past five years, aimed at improving the viability of the credit union sector.
The Central Bank eased previously highly restrictive limits on long-term lending in 2020.
Laws introduced in 2023 allow credit unions to refer members to peers for services for the first time. They also enable them to club together to provide loans. And they introduced the concept of a corporate credit union – a credit union for credit unions – to support collaboration and pool certain resources.
Last year, the Central Bank gave the credit union movement additional lending flexibility, which, it estimates, could treble the sector’s capacity for mortgage and business lending to about €9.9 billion.
Effective from last September, credit unions, regardless of size, can lend up to the equivalent of 30 per cent of their total assets by way of home mortgages. Business lending can reach as much as 15 per cent of assets.
Malone said the movement had capacity to lend about €14 billion in total. “We’re going to be in the [mortgage] market for the long term,” he said. “We’re not going to come in and out of this market. When you look at some nonbank lenders, they operate in the market when interest rates are at a certain level and then migrate back out of the market when [funding rates soar].”
