Credit unions planning a national mortgage brand

The issue for St Raphaels, St Pauls (both the Garda Credit Unions) and Health Services is that they have all reached the upper limit that CBI allow them to lend mortgages:

2016 Regulations (as amended) extracts 12A.(1) A credit union may apply to the Bank for approval to increase its combined total gross amount outstanding in relation to house loans and business loans to 15 per cent of the assets of the credit union. (I think they have all reached that limit).

So they either lift their assets by more savings (liabilities and assets go up); repayments by existing members.

Credit Union would be shot at dawn if it breaches the Regulations. meanwhile CBI does nothing on savings rates with Banks. Mind boggles.

With pressure from our leader - can see the Governor calling him shortly - CBI could change the Regulations by Statutory Instrument.
 
the wife is with the edcu, that on the list but they dont have anything relating to mortgages on their webpage. I've emailed them aswell.
St.Raphaels, I didnt know that about them, that really limits their mortgage offerings
 
EDCU is no longer taking on customers for their mortgage switcher product as its is over subscribed.
 
WizardDr said:
Credit Union would be shot at dawn if it breaches the Regulations. meanwhile CBI does nothing on savings rates with Banks. Mind boggles.

With pressure from our leader - can see the Governor calling him shortly - CBI could change the Regulations by Statutory Instrument.
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I think the limits are probably set too low at present but the typical credit union's balance sheet is far too small to manage the concentration risk associated with mortgages.
 
24601 said:
I think the limits are probably set too low at present but the typical credit union's balance sheet is far too small to manage the concentration risk associated with mortgages.
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The concentration risk might be in two parts. From a property value point of view Ireland has two Dublin and the rest. That is to say Dublin (defined widely) prices rise faster than the rest and fall faster than the rest. The second is people in the same business. Some of the non-community were attached to large employers e.g. St Pats & ESB. The properties were spread over a wide area. Now St Pats is Savvy and encompasses Dublin 1 and 2 and parts of Dublin 4.

The proposed Bill will allow CUs to refer business to another CU as a diversifying strategy. Recalling the €500m projected losses which evaporated I think CU risk has been overcooked to a frazzle.
 
WizardDr said:
The concentration risk might be in two parts. From a property value point of view Ireland has two Dublin and the rest. That is to say Dublin (defined widely) prices rise faster than the rest and fall faster than the rest. The second is people in the same business. Some of the non-community were attached to large employers e.g. St Pats & ESB. The properties were spread over a wide area. Now St Pats is Savvy and encompasses Dublin 1 and 2 and parts of Dublin 4.

The proposed Bill will allow CUs to refer business to another CU as a diversifying strategy. Recalling the €500m projected losses which evaporated I think CU risk has been overcooked to a frazzle.
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The concentration risk is simpler than that. I think credit unions are slightly less than 30% lent. Take a CU with €75m in assets and a loan book of €22.5m, which is made up exclusively of personal loans. If they start doing mortgages they will be able to do up to 10% of assets (assuming they meet the Central Bank's reserve requirement), or €7.5m. The median house price in Ireland was about 300k at the start of the year so that equates to 25 loans. Assuming no growth in other lending, when they max out their mortgage capacity they will now have a loan book of €30m but 25% of it is concentrated across 25 loans, all of whom are most likely living in a small enough catchment area, or working for one or related employers in the case of an industrial CU etc. If the big local employer closes down there could be mayhem.
 
I remember Mr Burgess, myself and a few others talking about a Credit Union (or Building Society), for the Credit Unions, which would effectively enable pooled resources to provide homeloans, with the risk of each homeloan shared, central expertise etc. Why this still hasn't been done, is beyond me...
 
MrEarl said:
I remember Mr Burgess, myself and a few others talking about a Credit Union (or Building Society), for the Credit Unions, which would effectively enable pooled resources to provide homeloans, with the risk of each homeloan shared, central expertise etc. Why this still hasn't been done, is beyond me...
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I think it is something they are looking at but it looks like a long term strategy.
 
24601 said:
I think it is something they are looking at but it looks like a long term strategy.
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I can only imagine what "long term" means, when it comes to the credit union movement... Hopefully our great grandchildren might be around long enough to see it happen!
 
MrEarl said:
I remember Mr Burgess, myself and a few others talking about a Credit Union (or Building Society), for the Credit Unions, which would effectively enable pooled resources to provide homeloans, with the risk of each homeloan shared, central expertise etc. Why this still hasn't been done, is beyond me...
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I think you have just designed a bank operating model ;)
 
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