Credit unions will soon be able to offer mortgages to rival those offered by Irish banks.

New legislation to be introduced next month will allow community lenders greater capacity to give loans to homeowners and businesses.

Currently, credit unions can lend 7.5% of their total assets - but the new proposals would see that figure double to 15%.

Department of Finance Junior Minister Jennifer Carroll MacNeill told Newstalk Breakfast the change is good news for customers.

"Credit unions are already providing mortgages in some cases, but what we want is for them to do a lot more," she said.

"What we want to do is make sure all credit unions can access mortgage services through the credit union movement."

'Credit unions are staying'

Minister McNeill said credit unions can offer more flexibility.

"I'm sorry for the banks, but what I am excited about is the opportunity for the credit union and the credit union members," she said.

"The credit unions can offer a flexibility that the banks don't offer.

"Sometimes it feels with the banks that, unless you're the perfect candidate, it's 'Computer Says No.'

"With the credit unions they understand their members, there's a better connection - they're also much more accessible.

"The credit union movement has retained a physical presence in every town in Ireland.

"Credit unions are staying."

A credit union sign in Dublin city in November 2012. Picture by: Radharc Images / Alamy Stock Photo

Minister McNeill said the changes will mean people can move around.

"They'll be able to pool their resources... and that'll make it easier for them to operate strategically," she said.

"Crucially, then, the credit union will be able to refer a member - where they don't wish to provide a current account or a mortgage - they will be able to refer that member to another credit union that does."

Minister McNeill said the credit unions will be able to lend out more than they can now, when the changes come into force.

"It's the proportion of their savings that they can lend out; right now, they have about €20bn in savings, only about €5bn of that is lent out," she said.

"I think that can be doubled."

Minister McNeill said over 4,000 mortgages were issued in July, worth about €1.3bn.

"The opportunity now for the credit union now, which is only doing about €300 million in mortgages, is absolutely enormous," she added.

Main image: Minister of State Jennifer Carroll MacNeill in Newstalk studios. Picture by: Newstalk