Credit union mortgage and business lending could almost triple in the coming years under proposals from the Central Bank which are being put out to consultation.
The regulator has suggested changes to the concentration limits for mortgage and business lending.
These would decouple the existing limits, allowing for new separate concentration limits for the two segments.
They would also remove tiering, giving all credit unions the same concentration limits, regardless of asset size.
Available lending capacity would also be adjusted for all credit unions for home and business lending.
A new limit of 30% of total assets would be placed on house lending and 10% of total assets on business lending.
The proposals would also remove the need for credit unions to receive a comprehensive business plan and detailed financial projections for business loans of €25,000 or more, community loans or loans to other credit unions.
The Central Bank said the adjustments would lead to significant growth in the overall capacity for house and business lending, which would rise from €2.9 billion to €8.6 billion.
Kevin Johnson, CEO of the Credit Union Development Association (CUDA), said this would lead to a tripling of the current mortgage loan book to over €2 billion.
"We are pleased that this modernising of the lending framework regulations for credit unions is in line with our request submitted to the Central Bank of Ireland in February 2024," he said.
"The Credit Union (Amendment) Act 2023 was designed to give credit unions greater flexibility, enabling them to engage in loan participation and syndication, which allows lending risks to be shared among credit unions."
"The combination of the legislation and these proposed regulatory changes mark a major step forward for the sector, empowering credit unions to enhance their offerings in both the mortgage and business lending markets."
The Central Bank said the proposed changes will ensure the regulatory framework remains appropriate for the sector.
It will also provide greater scope for those credit unions who wish to undertake further house and business lending, it said.
The proposals and consultation follow the completion of a review of the regulatory framework for credit unions.
It found that at a sectoral level there remains considerable capacity available for credit unions to provide house and business lending within existing limits.
But the regulator said that having completed the review and in order to enable the sector to sustainably develop in the long-term interest of its members, it was proposing to make a number of targeted changes to the regulations.
"The lending framework for credit unions has provided, and will continue to provide, important guardrails for the sector and for the protection of members' funds," said Deputy Governor of the Central Bank, Sharon Donnery.
"However, we are committed to ensuring the regulatory framework is responsive and appropriate in a financial system that is changing at pace."
"The proposed changes build upon the existing lending framework and follow our own comprehensive evidence-based review."
David Malone, CEO of the Irish League of Credit Unions, said he was delighted to see the proposed changes.
"We championed these changes over the last 18 months," he said.
"These proposals represent a vital step forward, further empowering credit unions to support homebuyers and businesses."
"We now look forward to engaging with our members and contributing to the consultation process. It is imperative that these necessary changes are implemented at the earliest opportunity."
The proposals remain open to consultation until February 11th of next year.
