Senator Victor Boyhan has called for a greater role for credit unions in the Irish mortgage market.
Boyhan thinks credit unions have the financing in place to be able to compete with banks and offer mortgages to customers.
“Irish credit unions are able to offer an increased contribution in the mortgage field,” Mr Boyhan told a meeting of the Seanad committee.
Mr Boyhan also suggested that credit unions could be used to fill the void caused by the exit of KBC and Ulster Bank from the Irish banking market and become “key providers of community banking”.
The government has already committed to acceding to the role of credit unions in Ireland as part of its program for government.
In response, the minister responsible for credit unions, Sean Fleming, said there were commitments to review the policy framework within which credit unions operate. He said his priority was to see credit unions increase their lending “because that’s how they become sustainable in the future.”
However, credit unions must comply with restrictive lending limits for mortgages imposed by the Central Bank. Mortgage and small business loans are limited to a combined maximum of 7.5% of total assets for most credit unions.
This means that a credit union with assets of €70 million and taking an average mortgage of €350,000 can only offer 15 mortgages under these restrictions, excluding any SME loans, according to the Irish League of Credit Unions.