Wednesday, 13 June 2018
Topical Issue Debate
Home Loan Scheme
I am taking this matter on behalf of the Minister for Housing, Planning and Local Government, Deputy Eoghan Murphy. I feel somewhat disadvantaged because the wording in front of me is slightly different from the wording submitted by Deputy Fleming. I thank him for raising the issue nonetheless.
Following a review of the two existing local authority home loan schemes, the house purchase loan and the home choice loan, the Minister, Deputy Eoghan Murphy, introduced a new loan offering, known as the Rebuilding Ireland home loan, earlier this year to replace the existing schemes. The new loan scheme is being implemented in accordance with the Housing (Rebuilding Ireland Home Loans) Regulations 2018. The regulations broadly set out the criteria for eligibility for loans, the maximum values for properties which may be purchased under the new scheme, as well as the duties of local authorities and borrowers.
The new loan enables creditworthy first-time buyers to access sustainable mortgage lending to purchase new or second-hand properties in a suitable price range where they cannot obtain a mortgage from a commercial lender. Long-term financing, provided by the Housing Finance Agency, has enabled the Rebuilding Ireland home loan to be provided at low fixed rates of interest. These low interest rates enable local authorities to act as lenders to eligible individuals who find themselves in this situation and enable them to purchase their own home. The loans are provided by the local authorities and the applications are assessed by the Housing Agency on their behalf. Each local authority must have in place a credit committee, which makes the final decision on applications for loans. There is also an appeal procedure in each local authority in order that those who are not satisfied with a decision regarding their application can have the decision reviewed.
The Housing Agency undertakes a detailed credit analysis, based on credit information furnished by the borrower, such as employment history, salary and financial statements; available information, such as the borrower's credit history, which is detailed in a credit check; and an evaluation of the borrower’s credit needs and ability to pay. The agency then makes a recommendation to the local authority as to whether a loan should be made to the applicant, which is then considered and decided upon by the local authority’s credit committee. The regulations provide for the Minister to issue a statutory credit policy, giving detailed guidance to local authorities for the processing of loan applications and the making of loans under the regulations. This updated document replaces the credit policy that was in place for the previous local authority lending schemes, which have now been superseded by the new home loan scheme.
I am aware that the Deputy has in the past raised the issue of publishing the credit policy. The revised policy is an internal document designed to provide written guidance to local authorities for managing and processing loan applications. Decisions by local authorities as to whether to advance a loan to an individual are taken on a case-by-case basis within the criteria as set out in the credit policy. As such, the policy is a commercially sensitive document, as would be the case with any other lender. Therefore, it would not be in the public interest to publish it, as this would conflict with the economic interests of the State and could seriously compromise the ability of local authorities to lend in an effective manner or otherwise impair their functions in this regard. On this basis, the Minister intends to continue the approach, which has been in place in respect of credit policies that governed previous local authority loan schemes, and treat the credit policy as confidential.
The operation of the new home loan scheme is still at a very early stage. However, the Housing Agency has indicated that by the end of last month, it had received a total of 1,150 valid applications from local authorities for assessment since the launch of the loan scheme. Of these, 876 have been assessed and 52% of the applications which have been assessed have been recommended for approval. The Department has been working closely with local authorities, the Housing Finance Agency and the Housing Agency to ensure that the new mortgage scheme is understood, accessible and operating as effectively as possible, particularly to address some initial teething problems that arose. Indeed, the Minister, Deputy Eoghan Murphy, has met the chief executive of the Housing Agency and the Housing Finance Agency. The Department has put in place a number of measures to ensure that information on the scheme is widely available. The dedicated Rebuilding Ireland home loan website includes a helpful frequently asked questions document and a borrower information booklet, which may answer any questions people may have.