Credit union to offer mortgages

BISHOPSTOWN Credit Union swept into the mortgage market yesterday with a radical plan to take on banks and building societies and undercut them on lending rates.

The Cork-based operation, which serves 20,000 members from offices at Curraheen Road, Wilton Road and Wilton Shopping Centre, said it had been given the go-ahead by the Financial Regulator to team up with mortgage specialist IIB Bank and become the first credit union in the country to enter the market.

Members are expected to approve the deal at the credit union’s AGM on November 29.

Chief executive Ray Kenny said the initial response from members had been “overwhelming” and that the initiative would fit well with the body’s existing services.

“We already offer extensive financial services to members at the three branches under the Bishopstown Credit Union banner, and this ground-breaking initiative with IIB Homeloans will cement our reputation as a provider of financial services.”

IIB beat off competition from other banks to land the deal. Its chief executive, Ted Marah, said the deal was a landmark in the mortgage business and “a substantial endorsement” enhanced IIB’s reputation as an innovator.

The major selling point for credit union members will be a 0.25% discount on their borrowing rate for the first year, a typical saving of around €500.

Mr Kenny said: “Other benefits are that mortgage services will generate additional streams of income for the credit union, which will increase its financial stability.

“Bishopstown Credit Union intends to pass the benefit of this income back to its membership by reducing its interest rates further and/or increasing its dividend.”

Up to 10 credit unions have made approaches to the Financial Regulator to express their interest in entering the homeloan market. But current legislation means they will all need to team up with a banking partner, as they are precluded from providing the loans from their own funds.

Registrar of Credit Unions Brendan Logue, whose office is part of the Financial Regulator, welcomed the initiative.

“While the Financial Regulator imposes strict criteria for the approval of such initiatives, we welcome this new alliance and see it as a model for other credit unions who wish to extend mortgage or other services to their members by forming alliances with specialist providers,” he said.

Bishopstown signed a deal with investment giant Royal Liver earlier this year to provide services such as life cover and critical illness protection.