Deputy central bank governor Sharon Donnery says the regulator is planning ‘targeted but significant’ changes to regime after pressure from industry and government ministers.

The Central Bank’s deputy governor has said that the regulator is looking at changing the rules governing credit unions to allow the sector to lend more. Ms. Donnery was speaking at a conference on internal-audit services held by the Irish League of Credit Unions last month.

Revised lending regulations were introduced in 2019, to allow greater flexibility for credit unions to diversify their loan books and engage in more long-term lending, including mortgages.

In August of this year the Irish League of Credit Unions stated that raising credit union lending limits would offer “immediate and tangible benefit” to homebuyers, given the evidence of strong and growing demand for the sector’s mortgage products.

The body, which represents more than 90 per cent of the Republic’s total active credit unions, published data indicating a 10% jump in its members’ mortgage lending in the three months to the end of June 2024 from the previous quarter to €518 million. Mortgages also now represent 10% of the sector’s total loan book, the ILCU said.

Overall, there were 110,000 new loans issued in the quarter, up 21 per cent on the previous quarter, representing total annual loan growth of 12.8 per cent. The total ILCU-affiliated loan book stood at €5.74 billion at the of June, the highest level in more than 15 years.

Donnery told the conference last month that she had heard some criticism from the sector about the regulations’ lending limits, but she believed that they were needed to enable credit unions to build the necessary capacity and capabilities for this type of lending.

“I am happy to say that our supervisory experience tells us that many credit unions in the sector have built this capacity, and they have prudently engaged in business and mortgage lending,” she stated. As a result, the Central Bank has carried out a review of the lending limits that it will publish later this month.

 

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