Lending limits on credit unions set to be 'significantly' increased 

Total capacity for house and business lending will increase from €2.9bn to €9.9bn

The Central Bank of Ireland said the changes will come into effect on September 30. Picture: Leah Farrell/Rollingnews.ie

The Central Bank of Ireland has announced a number of changes to credit union regulations which will "significantly increase” the amount of money the sector can lend out in the form of mortgages and loans to businesses.

Under the current system, house and business lending by credit unions was limited to a combined 7.5% of the institution’s total assets. Within this, total business loans cannot exceed more than 5% of total assets.

These limits could be increased after satisfying Central Bank criteria up to a maximum limit of 15%.

However, under these new rules, credit union house and business loans will be separated and subject to their own lending limits. House lending will have a limit of 30% of the total assets of the credit union, while business lending will have a limit of 15%.

These limits will be available to all credit unions, representing a simplified approach to the current framework.

The Central Bank said these new limits will increase the total lending capacity of the sector for house and business lending from €2.9bn to €9.9bn. The changes will come into effect on September 30.

These changes follow a review of lending within the sector as well as a public consultation.

Deputy governor with responsibility for financial regulation at the Central Bank Mary-Elizabeth McMunn said these changes come following a significant review involving engagement with the public and stakeholders.

Ms McMunn said these changes would “significantly increase the potential of the sector to provide house and business loans to their members”.

“The updated framework aims to allow credit unions the ability to sustainably develop into the future — within the appropriate guardrails the limits provide and in the long-term interests of their members.” 

Ms McMunn added while this allows credit unions to increase their capacity to engage with house and business lending, it is “our expectation that credit unions planning to avail of the changes will do so in a phased, prudent, and sustainable manner”.

“We also expect credit unions to continue to develop the skills, expertise and risk management necessary for this type of lending.” 

Chief executive of the Irish League of Credit Unions  (ILCU) David Malone, which represents 90% of credit unions operating across the country, said the reforms represented a “major step forward for the sector”.

“It provides credit unions with unprecedented opportunities to better serve their members and communities,” he said.

Chief executive of the Credit Union Development Association Helen Carbery said the changes give credit unions the flexibility to “better meet the needs of their members, strengthen their financial sustainability, and deliver greater support to local communities across Ireland”.

The overall value of the mortgage loan book held by credit unions has been increasing steadily. In the year to the end of March, credit unions, which are members of the ILCU, saw their total mortgage lending increase by 34% to €632m compared to the same period in 2024.

At the time, mortgages represented 10.4% of the entire credit union loan book — up from 8.5% in March 2024 and 5.7% in March 2023.