Credit unions raise the ante in mortgage battle with banks as they launch lower-cost home loan

"The new product has one of the lowest interest rates in the market and comes weeks after credit unions were cleared to triple their current mortgage and business lending. Central Bank executives have given the go-ahead to changes to lending regulations for the sector. The new rules would allow an increase in the total lending capacity of the sector for mortgage and business lending from €2.9bn to €9.9bn, the Central Bank said. A number of larger credit unions already offer mortgages, but each has a different interest rate."

"The new product, Credit Union Mortgage, will mean there will be a standardised national mortgage, with a set interest rate. The new single mortgage product is launching with a variable interest rate of a competitive 3.85pc. The rate will be capped at 4.4pc for the first three years. Credit unions said the new product provided borrowers with a certainty of repayment, while also delivering the benefits of a variable offering."

"It will be available to new home buyers and those looking to switch lenders, in around 30 credit unions nationwide this month, and in a further 40 next year. Minister for State for Financial Services and Credit Unions Robert Troy said the recent decision of the Central Bank to increase lending limits for credit unions was welcome because it supported more competition in the market. "Broader mortgage infrastructure and competition will be important in the years ahead, ensuring first-time buyers and those trading up or down have access to competitive financing.""

A standardised national Credit Union Mortgage is launching with a variable interest rate of 3.85pc, capped at 4.4pc for the first three years. The Central Bank approved regulatory changes that increase sector lending capacity from €2.9bn to €9.9bn, enabling expanded mortgage and business lending. The product will be available to new buyers and switchers in about 30 credit unions this month and a further 40 next year. CU Mortgage Services developed the centralised product to provide consistent rates and support services to member credit unions. The move is intended to increase competition with banks and broaden financing options.

Read at Irish Independent