Michael D'Arcy (Wexford, Fine Gael) | Oireachtas source

The Rebuilding Ireland home loan scheme launched on 1 February 2018. Prior to its launch, an initial tranche of €200 million of long-term fixed rate finance was borrowed by the HFA to provide funds for the scheme for local authorities. The Rebuilding Ireland home loan scheme is a remodel of two previous schemes provided by local authorities, namely, the house purchase loan and home choice loan schemes. As originally conceived, the expected take-up under the scheme is limited, at around 1,000 mortgages over three years. It was envisaged that the loans should not contribute to increasing demand for homes, given that the number of borrowers eligible for the loan scheme would be restricted by the loan criteria and the overall scale of the measure was so limited. It was also agreed that a loan to value ratio of 90%, as per the Central Bank's macro-prudential rules, would apply to the Rebuilding Ireland home loan scheme. Risk related to funding the scheme is managed, with the HFA providing long-term fixed rate hedged finance and the scheme being limited to €200 million over three years.

From the data collected to date, it is clear that there has been greater demand for the scheme than initially anticipated. As a result, the scheme would require a further tranche of funds to be borrowed by the HFA for it to continue. Officials from the Department of Public Expenditure and Reform and the Department of Housing, Planning and Local Government have been engaging on the matter since October 2018 and in January this year the Department of Housing, Planning and Local Government communicated its intention to seek sanction for additional funding to manage the demand which had far exceeded the expected original 1,000 mortgages over three years. Prior to the submission of a request for sanction, the Department of Housing, Planning and Local Government conducted a review to ascertain if there was scope to make changes to the operation of the scheme to achieve greater efficiency and consistency and also to determine the timelines for applications being processed by the local authorities. Further details of the review can be obtained from the Minister for Housing, Planning and Local Government.

In conjunction with the review, the Departments of Finance and Public Expenditure and Reform consulted the Central Bank and the Department of Housing, Planning and Local Government on the impact and size of the scheme in the overall market. The Department of Housing, Planning and Local Government consulted the local authorities to estimate the additional funding required and subsequently submitted a request for sanction to the Department of Public Expenditure and Reform on 14 June. The request is subject to the normal deliberations afforded to any request of such a nature, which would include general Government balance and debt considerations in the context of a uniquely challenging budgetary scenario for 2020. Notwithstanding the submission of a request for additional funding, the scheme remains open to applications to all local authorities.

It is the role of the Minister of Public Expenditure and Reform to deliver sustainable public finances. In that regard, the Minister and his officials are finalising the assessment, with a view to announcing a further tranche of funding very soon. Further information on the estimation of the amount of extra funding required is a matter for the Department of Housing, Planning and Local Government. It is anticipated that an announcement on further funding will be made very soon.

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