Changes to Credit Union lending regulations

Introduction

On 14 August 2025, the Central Bank of Ireland announced significant changes to the regulatory lending framework for credit unions. These targeted changes aim to provide credit unions with increased scope to offer house and business lending to their members. Viewing this purely from a standpoint of increased competition, it will be interesting to see how such changes impact the wider lending market in Ireland moving forward.

What are some of the changes?

The new regulations, which will come into effect very soon on 30 September 2025, include several key updates:

Separate Lending Limits

The lending concentration limits for house lending and business lending will be separated regardless of the total assets size of the applicable credit union. House lending will have a limit of 30% of total assets, while business lending will have a limit of 15% of total assets. This represents a simplified approach to the current framework and will increase the total lending capacity for credit unions from €2.9 billion to €9.9 billion.

Non-Principal Residence House Lending

The changes will provide limited scope for non-principal residence house lending, allowing credit unions to diversify their lending portfolios. Such lending could include loans for second homes, holiday homes and buy-to-let (BTL) loans. A limit for such lending of 2.5% of total assets will apply for all credit unions within the 30% of total assets concentration limit for house loans mentioned above.

Removal of Certain Requirements

Certain underwriting and board reporting requirements will be removed, streamlining the lending process for credit unions. Specifically, the related parties lending board reporting requirements set out in Regulations 20 and 21 of the Credit Union Act 1997 (Regulatory Requirements) Regulations 2016 will be removed and the threshold amount for related parties exempt exposures will be increased to exposure of €10,000 or less.

Conclusion

It has been noted by market participants that the aforementioned amendments will permit credit unions greater diversity and scope when servicing their loan portfolios and that these collective targeted changes to the lending framework will allow for growth in mortgage and business lending in the credit union sector, while providing real competition in the wider lending landscape.

It will be of interest to see how the changes play out over the next number of years, and something of which this office will be keeping a keen eye on, particularly bearing in mind the ever-increasing presence of Avant Money (Irish branch of Bankinter) in the home loan mortgage market, together with the continued role of alternative lenders in providing corporate finance to Irish SMEs in light of their greater appetite for risk and prompt execution.

How We Can Help

For specific advice on the matters addressed in this article, or general finance queries, please contact Gregory Gannon in our Banking & Finance Department (ggannon@bhsm.ie / +353 (0)1 440 8300).

This article is for general information purposes.  Legal advice must be obtained for individual circumstances.  Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.