Credit unions hope to boost new mortgage lending
The Solution Centre, based at City West in Dublin, and which is run by industry body the Credit Union Development Association, said it will provide help for the biggest credit unions in the country, representing one million customers.
Credit unions taking part include Tullamore in Offaly, St Anthony’s and Claddagh in Galway, Dundrum in Dublin, as well as St Canice’s in Kilkenny, which is the biggest community credit union in the country.
Investec Ireland analyst Owen Callan said credit unions are attempting to significantly increase lending to residential mortgages this year, as they seek to challenge the mainstream banks.
He estimated that the €400m could represent around 5% to 6% of the expected new mortgage demand in the Irish market this year.
The amount of new mortgage lending has slumped during the economic crash, and has been slow in picking up in recent years.
Investec Ireland said that credit unions could do well in capturing niche markets such as lower income families looking to buy affordable homes — an area CUDA said it would be targeting.
CUDA chief executive Kevin Johnson said credit unions were ideally placed to fill the gap in the market left by building societies.
He said that there were a number of affordable housing schemes aimed to help lower-income households buy their own homes, or buy an existing previously rented council house.
“Others offer eligible first-time buyers the chance to buy newly-constructed homes and apartments at prices significantly less than their market value.
“Credit unions are happy to support these purchases, particularly as the loan-to-value ratios are typically relatively low and the existing tenants invariably have a proven payment record,” he said.
Credit unions face restrictions on the amount they can lend out in mortgages.
But CUDA said only 2% of the available €5bn has been lent out on 10-year terms, leaving €400m to lend.
CONNECT WITH US TODAY
Be the first to know the latest news and updates
