Mortgage lending by credit unions rises 71pc in a year

The member-owned lenders are reporting that the value of home loans has jumped by 71pc in the last year, to more than €600m across the sector.

Credit unions were now on target to reach mortgage lending of €1bn in the next two years, said the Irish League of Credit Unions (ILCU), one of the representative bodies for the sector.

A recent survey showed credit unions were the cheapest lenders for those taking out a mortgage.

Repayments on a typical mortgage taken from a local credit union are around €720 a year less expensive than those taken from a bank or a non-bank lender, the research showed.

Around 100 credit unions are offering mortgages. Figures show that credit unions have the lowest interest rates on mortgages for first-time buyers, switchers and movers.

The average mortgage interest rate being charged by credit unions is 3.72pc, according to recent data from a credit union platform that handles the majority of mortgage approvals in the sector.

The ILCU said there had been “a phenomenal increase in credit union mortgage lending in recent years”.

Demand for credit union mortgages was continuing to grow, driven by what it said was competitive rates but also by what it described as a personalised service with quick turnaround times.

The recent passing of the Credit Union (Amendment) Act 2023 would enable credit unions to increase their national presence in mortgages, the league said.

This legislation means that a credit union that does not offer mortgages will be able to refer its member to a another one that does.

This effectively means that every credit union in the country will be able to offer mortgages.

Credit unions have seen mortgage lending surge in the last year

The ILCU, also known as the league, represents more than 90pc of the active credit unions in the country, and released the financial results for its members for the January to March quarter.

It shows overall lending, which is mainly made up of personal loans, is up 13.6pc over the last year.

Arrears remained close to all-time lows, league chief executive David Malone said.

Credit unions have a 50pc market share in the personal unsecured lending market

In total, there were more than 90,400 new loans issued in the quarter, this is up 4pc on the same quarter last year, which equates to more than 1,000 loans issued every day.

Mr Malone said credit unions had funds to lend and were providing finance to 3.25 million members throughout the country.

Credit unions now had a 50pc market share in the personal unsecured lending market, Mr Malone said.

The assets of league-affiliated credit unions stood at €18.1bn at the end of March. Savings of affiliated credit unions have increased to €15.2bn.

The league said more than 1,000 new credit union current accounts had been opened weekly in the second quarter.

Mr Malone said: “These robust financial results highlight the continued growth trajectory and future potential of credit unions, and opportunities that they offer members all across Ireland.”

He said the sector was awaiting the results of the Central Bank’s review of the credit union lending framework.

“We are hopeful that the review will yield targeted changes to allow more choice for consumers and remove crisis-era restrictions.”

He said the changes that credit unions were seeking would enable more mortgages and business lending.