Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

My role as Minister for Finance is to ensure that the legal framework for credit unions is appropriate for the effective operation and supervision of credit unions. The Registrar of Credit Unions at the Central Bank is the independent regulator for credit unions. Within her independent regulatory discretion, the registrar acts to support the prudential soundness of individual credit unions, to maintain sector stability and to protect members' savings.

Credit unions can provide mortgages to members, within certain maturity limits contained in the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016, known as the regulations. The regulations set out the percentage of a credit union's loan book that can be outstanding for periods exceeding five and ten years, as well as limits on the maximum outstanding liability to an individual member.

Under the regulations issued by the Central Bank in January 2016, credit unions continue to be allowed to lend up to 30% of their loan book over five years and up to 10% over ten years, subject to a maximum maturity of 25 years. In addition, credit unions are able to apply to the Central Bank for an extension to their longer-term lending limits of up to 40% of their loan book over five years and up to 15% of their loan book over ten years. Approval is subject to conditions set by the Central Bank. There are 11 credit unions approved to avail of increased longer-term lending limits.

The Central Bank informs me that the December 2016 prudential return indicates that, for the sector overall, total gross loans over ten years amount to approximately 2.7% of total loans in the credit union sector compared to the limit of 10%, and 15% in some cases. The Central Bank has indicated that while it can see longer-term lending, including mortgages, as part of a balanced portfolio of total lending, in its analyses credit unions need to consider the impact of longer-term lending on interest margins, return on assets and on balance sheet structure as the issue of funding longer-term lending with short-term funding is a challenge for the credit union business model.

Additional information not given on the floor of the House:

The Central Bank further informs me that consumer mortgage lending is an activity that has its own unique risk profile, and proposals to become involved in mortgage lending in a significant way must be supported by an evidence based business case. 

See this speech in context