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Credit Unions eye up mortgage market

Sam Cordon

November 19, 2013

So far only four out of the 380 credit unions in the UK have lending permissions but this could be set to increase due to the lull in their preferred unsecured lending market.

Mark Lyonette, chief executive of the Association of British Credit Unions, said: “Unsecured lending has dipped so credit unions have to be careful they don’t end up with too much liquidity.

“70% to 80% of the deposits taken by credit unions are lent out while the remaining funds are banked as liquidity. Over the last five years borrowers have been tightening their belts so achieving this balance has been harder to do. This is trend is driving the credit unions’ growing interest in the mortgage market.”

Lyonette said he has had a conversation with Paul Smee, director general of the Council of Mortgage Lenders, who is keen to help the credit unions get to grips with how to operate in the mortgage market.

The four credit unions which hold permissions are No.1 Copperpot, Scotwest, Capital and Leeds; No1 Copperpot and Scotwest are also CML members.

Smee said: “We are delighted that we now have two credit unions in membership of the CML and we recognise the increasing appetite of credit unions to offer mortgages.

“We are always delighted to work with lenders, including those newly entering the market, which want a better understanding of how to navigate what can seem like a complicated operating landscape.”

Lyonette said that one approach which could make mortgage lending more palatable for credit unions is to collaborate with other credit unions to cut down on the costs and resources required to support a new lending operation.

He said: “A centralised model is one option. A hub at the centre of a number of credit unions, dealing with administration and processing, would lower the barriers to entry in the mortgage market.”

Lyonette said he was currently in discussions with the CML and the plans were still in the early stages.


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