Credit union mortgages jump to €700m

The Irish League of Credit Unions (ILCU), which represents the vast majority of active credit unions in the Republic of Ireland, released its year-end results on Monday showing a significant expansion across its entire lending portfolio.

Despite the dominance of the main pillar banks when it comes to home loans, the continued expansion of the credit union sector and the planned entry by new financial institutions is expected to bring further competition to the market following the exit of Ulster Bank and KBC from the Irish market.

“The credit union sector’s mortgage loan book has climbed to more than €700m, almost doubling over two years, with clear momentum toward a €1bn milestone over the next two years,” David Malone, CEO of the ILCU, said.

“In this context, we eagerly await the outcome of the Central Bank review of the credit union lending framework, and we would be hopeful of an easing of mortgage lending limits, further empowering credit unions to support homebuyers.”

Fintech bank Revolut confirmed at an event in London last week that it was on target to commence offering mortgages to customers in Ireland next year along with France and Lithuania.

However, Ireland’s two largest banks AIB and Bank of Ireland maintain their dominance in the sector with three in every four new mortgages, with PTSB holding a further 16% share.

Easing of restrictions

Restrictions remain in place for credit unions which limit mortgages as a percentage of their overall lending books. The Central Bank is due to publish a review next month of its lending framework.

The credit union sector is hoping these restrictions will be raised to allow greater mortgage lending.

Digital bank Revolut said its goal is to offer a fully digital mortgage product, adding that mortgages will form part of the credit offering it is looking to build. The company is also exploring overdrafts, it said on Friday.

The global fintech app also said it would be rolling out branded ATMs.

The ILCU results published on Monday show total assets of its members were up €423m for the year, from €17.91bn to €18.34bn, a 2.4% increase when compared to the previous year, and are up over 50% in the last 10 years.

“These year-end financial results highlight the continued impressive momentum of credit unions with the 14th straight quarter of growth across our lending products. We have seen a continued increase in lending over the course of the last 12 months, combined with all-time low arrears as well as an overall increase in the size of the loans we are offering.

"These indicators are reflected in our dominance of the personal lending market, with a 53% market share and illustrative of the work being undertaken by credit unions across the country for, and on behalf of members.

“Looking forward to 2025, the Credit Union (Amendment) Act brings an exciting opportunity for credit unions to further develop and expand their services in 2025 and beyond,” Mr Malone said.

“By leveraging the enhanced provisions of this legislation, credit unions in Ireland can continue to evolve. With a focus on innovation, collaboration, and member-centric solutions, credit unions are well-positioned to play a pivotal role in addressing Ireland’s evolving financial landscape."