The Central Bank has today announced significant, targeted changes to the regulatory lending framework for credit unions, which will allow the sector increased scope to provide house and business lending to their members.
The new framework increases the total lending capacity for credit union house and business lending from €2.9 billion to €9.9 billion.
It will also see house lending have a limit of 30% of total assets, while business lending will have a limit of 15% of total assets.
The Central Bank said these limits will be available to all credit unions and represent a simplified approach to the current framework.
The regulator said the changes are forward looking, will future-proof limits and provide certainty to credit unions in their business planning.
Other changes to the lending regulations include providing limited scope for lending for second homes and the removal of certain underwriting and board reporting requirements.
The new lending limits will apply from 30 September 2025.
Deputy Governor, Financial Regulation, Mary-Elizabeth McMunn said the changes have been agreed after a significant review which included engagement with stakeholders and a public consultation process.
“While considerable capacity remained for further lending within the previous lending limits, the updated framework aims to allow credit unions the ability to sustainably develop into the future – within the appropriate guardrails the limits provide and in the long term interests of their members,” Ms McMunn said.
“While the measures will provide more flexibility and capacity to engage in house and business lending, it is our expectation that credit unions planning to avail of the changes will do so in a phased, prudent, and sustainable manner,” she said.
“We also expect credit unions to continue to develop the skills, expertise and risk management necessary for this type of lending. For our part at the Central Bank, we will continue to support credit unions through constructive and open engagement, and our proportionate risk-based supervisory approach,” she added.
But she said that while these changes are important, enabling regulations on their own are not enough.
“To address current and future challenges, credit unions must now take the opportunities provided to them in the regulatory framework so that they can continue to play their important role in delivering for their members, communities and the financial sector,” she concluded.
The Irish League of Credit Unions, which represents 90% of the total active credit unions in the Republic of Ireland, has welcomed the changes in the lending framework.
David Malone, CEO of the Irish League of Credit Unions, said the targeted reforms represent a major step forward for the sector.
“The new framework increases the total lending capacity, for credit union house and business lending, from €2.9 billion to €9.9 billion. It provides credit unions with unprecedented opportunities to better serve their members and communities,” he stated.
“These changes will allow credit unions to contribute more meaningfully to addressing Ireland’s housing challenges, and the enhanced business lending opportunities will support local economic development,” Mr Malone said.
“The reforms position credit unions to continue their vital role in serving their members and communities for years to come,” he added.
Helen Carbery, CEO of the Credit Union Development Association (CUDA), said that the changes announced today gives credit unions the flexibility to better meet the needs of their members, strengthen their financial sustainability and deliver greater support to local communities across Ireland.
She said the extension of the concentration limit for house loans to 30% of total assets, the decoupling of business and house lending limits, and the new provision to lend for the purchase of second homes will enable credit unions to respond more effectively to the diverse housing needs of their members.
“These changes will support both first-time buyers and those seeking to secure accommodation for family members or invest in the local rental market,” she said.
She noted that mortgage lending by credit unions has grown significantly in recent years, and with these new rules they have the potential to more than double that contribution in the coming years.
She also said the increase in the business lending limit to 15% of total assets is a particularly “positive” step.
“It will allow credit unions to provide more finance to local small and medium-sized enterprises, which are the backbone of our economy. Access to affordable, community-based finance can help these businesses invest, expand and create jobs, supporting economic resilience in towns and villages nationwide,” she added.
“Importantly, the removal of tiering ensures that all credit unions, regardless of size, can operate under the same lending limits. This levels the playing field and allows every credit union to fully utilise its potential to support members and communities,” she stated.
“Taken together, these reforms will enable credit unions to diversify their loan books, enhance their financial viability, and deliver even more value to the people and communities they serve,” Ms Carberry said.
“CUDA will work closely with our members to ensure they can fully leverage these opportunities for the benefit of both their organisations and the communities they support,” she added.
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