Michael Finneran (Roscommon-South Leitrim, Fianna Fail)

I propose to take Questions Nos. 27, 56 and 60 together.

Over 1,400 prospective purchasers have formally registered interest on the dedicated home choice loan website and, to date, 33 applications have been made, with two approvals issued in principle. A significant number of inquiries have also been received from brokers in relation to applications that may be pending. No loan draw downs have yet taken place.

The home choice loan was introduced not to provide an incentive for households to enter the housing market, but to provide mortgage finance to facilitate certain first-time buyers who have decided to purchase a home at this time. The scheme is, therefore, designed to respond, in a very targeted way, to a specific set of circumstances in the housing market whereby prospective middle income first-time buyers who would previously have been in a position to access mortgage finance from one of the financial institutions, are not currently in a position to do so, due to the impacts of the credit crunch.

The scheme is operated by four local authorities acting on a regional basis, with administrative support from a central processing unit in the affordable homes partnership. Total costs of some €280,000 have been incurred on establishing the scheme to date and these have been met from within existing resources. The projected costs for the remainder of 2009 and 2010 are €10,000 and €20,000, respectively. In addition, it is expected that the ongoing administrative costs will be met from normal lending margins.

The home choice taken applies to new houses and self-builds because a significant majority of first time buyers purchase new houses. At the time of introduction of the scheme the average new house price was almost 14% lower than the average second-hand house price, so it was considered appropriate to target the scheme towards properties which are more affordable for first-time buyers. The price differential between new and second-hand houses nationally remains significant, at 13%. I do not, therefore, propose to amend the terms of the scheme at this time.

However, as indicated previously, I will keep the scheme under review. In that context, particular attention will be paid to any changes in purchasing tendencies amongst first-time buyers generally, as well as to the impacts of the Government's wider efforts, through measures such as the bank guarantee and recapitalisation schemes, to ensure that Irish financial institutions have access to the normal funding necessary to operate their day-to-day business in the mortgage market.

See this speech in context