Dr. Conor O'Toole:

The are two components to the Deputy's question, first, the level of the scheme and, second, the targeting and coupling of the scheme with the further supports that are available in the market. It is important to say that the research we have done historically shows that these types of credit-based interventions are with merit. They can get to households that otherwise would not have been able to make the transaction and, therefore, these types of instruments can be very meritocratic in that context. In terms of their impact on the inflationary channel, there are a number of aspects to the intervention that would, for example, exacerbate or lower the degree to which that price inflation may materialise. The larger the intervention, the shorter the timeframe in which that intervention takes place. The number of recipients of that intervention is also important. For example, if it is spread among a large number of users of the scheme and all of those users have more purchasing power, that can have an impact as well as the general level.

In regard to the targeting of the measures, the targeting is important in the context of the constraints households face. For example, is it that they have an insufficient deposit such that they are down payment constrained? In that context, an equity-type scheme is more important. If it is the case that their loan to income ratio is constrained, that would be much more an income constraint, which the Rebuilding Ireland home loan scheme would deal with. The targeting is important in the context of, in particular, the parts of the income distribution that would be impacted by any particular intervention. Work we did previously on the Rebuilding Ireland home loan scheme showed that it was really good at getting to applicants who were at the lower end of the income distribution but underserved by the broader commercial market. That is a case of trying to tailor for a gap in the market. The tailoring of this measure is important. To ensure the maximum economic additionality from the intervention, it is critical that it goes to those households which otherwise would not have been able to make the transaction. That is complicated to get at, but there are a number of ways to do it. For example, there should be a screening of the borrower's attempts to secure credit through the normal channels and an interrogation of the financial circumstances of the borrower. It is important the income and savings picture of the borrower is well known in the context of the scheme to ensure that it goes to those households with the greatest need. That will boost the economic additionality from a scheme like this.