Auto and home improvement loans dominate credit union balance sheets


Auto and home improvement loans account for more than 50% of the 4.5 billion euros outstanding loans to credit unions in the Republic, according to new figures from the Central Bank.

The research, released by the Central Bank, informed the bank’s latest consultation paper on the sector, which calls for an easing of long-term lending restrictions on the 264 credit unions operating here.

It showed that auto loans accounted for 28% of all loans from credit unions, or 1.26 billion euros. This is the largest category of loans, followed by home renovation loans, which account for 25.6% of the total.

Real estate and business loans, the two main forms of long-term lending in the economy, however, only represent 4.5% and 2.9% of the cumulative loan portfolio.


Much of this is because of restrictions on credit unions, which limit the amount of money they can lend over the long term. Only 30 percent of a credit union’s loan portfolio can be loaned over five years, while only 10 percent can be loaned over 10 years.

Even without the proposed changes, the Central Bank predicts that mortgage loans from credit unions will account for nearly 11% of the sector’s loan portfolio by 2022.

However, that can change dramatically if the new rules are approved. The Central Bank proposes to lift existing loan maturity limits and replace them with “concentration limits” for real estate and commercial loans.


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