Credit unions ready to make €400m splash in mortgage market

New infrastructure put in place as they target increased demand from first-time buyers...

If you're looking to buy a house, your local credit union might soon be your first port of call.

The Credit Union Development Association (CUDA) has announced a "milestone" step towards fully entering the mortgage market, as its Solution Centre puts in place an end-to-end mortgage support framework that will facilitate 32 credit unions in lending to prospective house buyers. 

The initiative will help them move into a market seeing increased demand due to the Government's help-to-buy scheme. It will offer credit unions access to specialist mortgage and legal expertise, to support their own internal resources. 

Credit unions are already offering mortgages, but they are restricted to lending just 10% of their loan fund on terms that run longer than 10 years. Just 2% of the €5 billion available in funding has been loaned in such a way, as a result.

The new framework should help bring more credit unions in to the market, freeing up the remaining 8% – an as-yet-untapped fund of €400 million.

CUDA chief executive Kevin Johnson told the Irish Times:

"Unlike banks, credit unions aren’t required to deliver profits for shareholders so anything we offer is priced to meet the needs and demands of members, and credit unions are ideally placed to fill the gap in the market left by building societies.

"The recent changes to the Central Bank’s mortgage rules and the Government’s 'help-to-buy' scheme will boost the number of first time buyers looking to buy, and should encourage the developers to build more new homes. Credit unions are ready to play their part in helping people to own their own homes."

Johnson also called for the lending restrictions to be loosened further, saying:

“It is now essential that these restrictive limits are increased in order to allow more people get their home loan from their credit union."