Credit unions should be allowed to lend to approved housing bodies to help ease the country’s housing crisis, the finance committee has recommended.
The Oireachtas committee said the measure should be given “serious consideration” and called for current lending limits to be reviewed to facilitate some community co-operatives entering the mortgage market.
Legislative changes may be needed if the lending caps are to be changed, the committee said.
Under the Central Bank regulations, credit unions can lend up to 30 per cent of their loan book in five-year terms and up to 10 per cent of their loan book over ten-years. They can also apply to increase these limits to 40 per cent over five years and 15 per cent over ten years.
The recommendations were contained in a report on the future of the credit union sector published yesterday by the finance committee, which is investigating the theme.
John McGuinness, chairman of the committee, said that the potential steps outlined in the report would address the “significant challenges faced by the sector”.
“The committee recommends that the credit union movement be empowered to contribute to alleviating the current housing crisis in the state. Serious consideration should be given to enabling credit unions to utilise their substantial assets to lend to approved housing bodies and help alleviate the housing and homelessness crisis.
“The committee endorses the Credit Union Advisory Committee report recommendation for a full review of the Section 35 lending limits and concentration limits.
“It is imperative that credit unions evolve and grow beyond the current permitted lending and concentration limits in a meaningful way, which would allow qualifying credit unions to make the necessary infrastructure investment into new areas such as mortgages,” said Mr McGuinness.
Other recommendations in the report included a review of credit unions’ legislative and regulatory requirements to ensure they are fit for purpose and proportionate, as well as introducing a tiered regulatory system to take into account the scale of each lender.
The Irish League of Credit Unions (ILCU) welcomed the report which it said made a “number of strong recommendations in relation to the support and development of the credit union sector”.
“It is particularly welcome that the joint committee endorses the ILCU’s proposal to allow the credit union movement to lend to approved housing bodies and help to mitigate the current housing crisis,” a spokeswoman said.
“We also welcome the report’s endorsement of a review of the Section 35 lending and concentration limits.”