The new rules apply from next month and will increase the total lending capacity of the sector for mortgage and business lending from €2.9bn to €9.9bn, the Central Bank said.
Experts said this could see credit unions putting it up to the banks on mortgage lending.
The Central Bank said the new rules will mean “considerably higher available capacity for credit unions to lend to members”.
It said it views this as a future proofing of the lending limits. It said the change will provide certainty to credit unions in their business planning.
Irish credit unions offer a wide range of financial services. Photo: Getty
Today’s News in 90 seconds – 14th August 2025
Currently the Central Bank imposes tough restrictions on credit union lending for mortgages and to small businesses over fears that they will over extend themselves.
The rationale for this is that mortgage and business loans are more complex than personal loans and come with risks of defaults that could prove costly for a credit union.
The credit unions have been arguing for a while that they, and especially the larger ones, have put processes in place and raised the skills levels of staff to allow them to satisfy regulators that they can handle larger loans.
Existing rules mean the limit on lending for mortgages and small businesses combined is 7.5pc of total assets for most credit unions.
The limit can be raised to 10pc, and up to 15pc, for larger credit unions that present a business case to the Central Bank and get permission for a higher amount of mortgage and small and medium-sized enterprises (SME) lending.
The limits mean a credit union with assets of €200m, taking an average mortgage of €350,000, can only offer 43 mortgages under the regulations, exclusive of any SME lending.
From September 30, the lending concentration limits for house lending and business lending will be separated, the Central Bank said.
Mortgage lending will have a limit of 30pc of total assets, and business lending will have a limit of 15pc of total assets of each credit union.
These limits will be available to all credit unions representing a simplified approach to the current framework.
Other changes to the lending regulations include providing limited scope for non-principle residence house lending and removal of certain underwriting and board reporting requirements, regulator said.
Deputy Central Bank Governor, Financial Regulation, Mary-Elizabeth McMunn, said: “Following a significant review which included engagement with stakeholders and a public consultation process, today we are confirming important targeted changes to the lending framework for credit unions, which will significantly increase the potential of the sector to provide house and business loans to their members.”
She said the new rules will 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.
“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.”
Ms McMunn said the Central bank expects credit unions to continue to develop the skills, expertise and risk management necessary for business and mortgage lending.
Chief executive of the Irish League of Credit Unions David Malone said the changes would provide credit unions with unprecedented opportunities to better serve their members and communities.