Regulator is poised to relax credit union rules on mortgages

Hopes have been raised that rules limiting the amount of mortgage lending by credit unions may be relaxed.

Credit unions have limits imposed on them, with the value of their overall loan books restricting what they can issue as mortgages, but the Central Bank said it was reviewing the rules.

The move to review the mortgage restrictions comes as credit unions are stepping up their efforts to capture some of the rising demand for mortgages.

The Government’s help-to-buy rebate for first-time buyers and a shortage of housing mean mortgage demand is strong.

A new initiative means credit unions are expected to step-up mortgage lending.

They are to target first-time buyers, trader-uppers and those looking to acquire properties in tenant-purchase schemes.

They could lend up to €400m this year, this despite having some €5bn to loan out. Current rules mean they can issue only 10pc of their individual loan books in long-term lending, such as mortgages.

But the Central Bank said it was reviewing the rules, in a move that could give a massive competitive boost to the home-loans market.

“Longer-term lending limits are constantly under review by us and are also being addressed in the strategic dialogue forum we initiated last year,” a spokesman for the Central Bank said.

Proposals for changes to the restrictions on long-term lending have already been put to credit union representative bodies.

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