The cash reserves of Irish credit unions could be used to ease the housing crisis in Cork, according to the chairman of the Gurranabraher branch.
Michael O'Connell was speaking after the Irish League of Credit Unions (ILCU) passed a motion to set up a centralised support structure to administer mortgage loans. It is expected this will be established by the end of the year.
The ILCU believes the decision will “pave the way for credit unions to become significant players in the mortgage market.”
Mr O'Connell said that credit unions could also loan money to the Government for the specific purpose of building houses in a branch's area.
“Everybody is talking about the lack of funding for housing. We have money that we will make available to the Government by way of a loan or a bond that would be specifically ring-fenced for investment in housing,” he said.
“One of the criteria that we would attach to that is that if we were to give €1m it would be used to build houses in our area because we are a community-based organisation and it's community people's money,” he added.
Mr O'Connell, a former city councillor and mayor, said it's an opportunity for the Government to fast track development and provide much-needed housing throughout the city.
“We were always of the view of providing money to the Government because the reality is that credit unions are awash with money. The drawdowns of loans have decreased significantly over the years,” he said.
“We'd have members that have deposits in the various banks, but we also purchase long-term and short-term Government bonds so that's where we get our income from – the interest on members' loans, interest on deposits in banks and returns on investments," he added.
Last year the ILCU, which represents 437 credit unions, offered the Government €5bn to ease the housing crisis as long as its members' money would be secured. The plan was envisaged to allow credit unions to invest their money in a time when investment opportunities are scant for the voluntary organisations.
“The investment portfolio has collapsed since the recession. Deposit rates in banks are down below 1% from an average of 7.5%.Therefore, credit unions would be looking to invest that money that we have,” said Mr O'Connell.
“We always felt that because people are saying there's no money to build houses, the credit union movement has money and we could invest that money through structures that would be properly regulated through the Central Bank and get more members guaranteed returns. We'd be delighted to support that,” he added.