Credit Unions set to target mortgage market

Discussion in 'Mortgages and buying and selling homes' started by Sarenco, Jan 23, 2017.

  1. Sarenco

    Sarenco Frequent Poster

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    https://www.rte.ie/news/business/2017/0123/847010-credit-unions/

    "The new mortgage service is initially being made available to credit unions representing almost one million credit union members.

    "Through the Solution Centre we have been able to help many credit unions make the move into the mortgage market, and are moving ever closer to our goal of making Irish Credit Union full service outlets for customers' financial needs," commented Kevin Johnson, CEO of the credit union representative body CUDA.

    Credit unions are subject to lending restrictions through regulation, which dictates that only 10% of their loan book can be for terms longer than ten years, with the possibility of that being extended to 15%."
     
  2. jim

    jim Frequent Poster

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    Will be interesting to see if their offering is in any way competitive versus the other Players.
     
  3. Sarenco

    Sarenco Frequent Poster

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    Actually, according to the Indo some credit unions already write mortgages. That's news to me – does anybody have any idea what kind of rates they offer?

    http://www.independent.ie/business/...-to-push-mortgage-lending-rules-35389278.html

    Chief executive of the largest credit union, St Raphael's, Clair Byrne hit out at the mortgage lending restrictions.

    The credit union, which has 34,000 members who are mainly gardaí, launched a mortgage product last March, but hit its lending limit in just 13 weeks.

    "We have the capacity and the expertise to provide significantly more mortgages to members who can clearly afford to repay these loans, but the Central Bank regulations are preventing us from doing so," Ms Byrne said.
     
  4. Sarenco

    Sarenco Frequent Poster

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    To answer my own question :oops: -
    • A House Loan up to the value of €300,000
    • Variable Interest Rate of 3.75% (3.82% APR*)
    • Loan term of up to 25 years
    • FREE Life Cover
    http://www.straphaelscu.ie/loans/mortgage-redemption-loan/

    Can't see the main banks quaking in their boots over that offering...
     
  5. Monbretia

    Monbretia Frequent Poster

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    Yes, I was involved in a credit union for a while and they did mortgages, not called that though, were done as secured loans secured on the property rather than on savings. Term was max 15 yrs and rate was secured loan rate so while lower than the norm not as low as a bank mortgage but on the other had a lot easier to get when main banks were just not lending.
     
  6. 24601

    24601 Registered User

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    And Raphael's are probably the cheapest when it comes to CU Mortgages. I've come across some that apply their standard loan rates to their mortgage products (with an APR in excess of 9% for one of them!!!!) Many of the higher interest rate mortgage products are offered by credit unions that only lend up to a certain amount such as €100,000 but by and large their rates appear to be usually 50-100% more expensive than the current market leader. I'd imagine something like the collaboration reported on today will push the rates down for those credit unions' members.

    It'd make you wonder though, if someone is willing to borrow to buy a house from a CU today at 5-6% APR that must be a good indication that they're subprime!?
     
  7. Monbretia

    Monbretia Frequent Poster

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    The ones I would have seen would not have really been subprime as such but too small fry for main banks, low incomes below the threshold a bank would like and usually buying lower cost houses. Also paying a good bit more in rent than loan would be costing, all in all not what I would call subprime, maybe not the top of the range but decent good people who managed their money well but just were not in the earning bracket the banks preferred.
     
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  8. Sarenco

    Sarenco Frequent Poster

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    Interesting.

    Is anybody else surprised that so many of our lenders want to compete in the near/sub-prime end of the mortgage market?

    Surely if a lender broke from the herd and made a really compelling offer to the "bullet proof" end of the market they would make out like bandits?

    It seems to me that our lenders really struggle to properly price risk but perhaps that is a product of the difficulties lenders have in enforcing security under our (frankly daft) system.
     
  9. MrEarl

    MrEarl Frequent Poster

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    The Free Life Cover caught my eye and is worthy of mention - it's a cost associated with a homeloan, so if you want to compare like with like for a borrower (or two borrowers !) under 50 years of age, have you factored this into your workings before concluding that the Banks won't be quaking in their boots ?

    Assume a Mortgage Protection Policy on joint lives for two borrowers taking out say a €280k loan over 25-years and what does that cost (under normal cover, never mind those unfortunite enough to have to pay a premium) ? .. see what I'm getting at ? :)
     
  10. TheJackal

    TheJackal Frequent Poster

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    Anyone know of any other CUs offering new mortgages?