Anne Rabbitte (Galway East, Fianna Fail) | Oireachtas source

The Deputy will appreciate that I am taking this on behalf of the Minister for Housing, Local Government and Heritage. As part of Housing for All a newly expanded local authority home loan was launched in January 2022. Like previous local authority mortgages, such as its predecessor the Rebuilding Ireland home loan, it is a Government-backed mortgage for first-time buyers and other eligible applicants delivered through local authorities. The scheme provides mortgage financing for those who are unable to secure a sufficient commercial loan.

The Department has no direct role in processing individual applications. The final decision on loan approval is a matter for the relevant local authority and its credit committee. Decisions on all housing loan applications must be made in accordance with the regulations establishing the scheme and the credit policy that underpins the scheme in order to ensure prudence and consistency in approaches in the best interests of borrowers and local authorities.

The Housing Agency provides a central support service that assesses applications on behalf of local authorities and makes recommendations to the authorities to approve or refuse applications. Between January 2022 and November 2022, 2,138 applications, including 214 Rebuilding Ireland home loan applications, were processed by the Housing Agency. Of these, 90 were invalid applications. Of the 2,048 valid applications assessed 889, which is 43%, were recommended for approval and 1,169, which is 57%, were recommended for decline.

Regarding the level of refusals, it is important to note that approval for the scheme requires the applicant to be eligible for the scheme and capable of repaying the money borrowed. There are several reasons refusals can occur. Applicants may not meet the eligibility criteria, such as being under certain income limits. Even if they meet the eligibility parameters, they may have issues with their credit history or their repayment capacity may not be enough to meet the monthly repayments required on the mortgage.

It is inherent in a mortgage scheme that there will be refusals, particularly for a scheme aimed at those on relatively lower incomes who were unable to source a sufficient mortgage from a bank. It is important to protect both the State and the borrower from taking on unsustainable mortgages. This is the function of credit policy and the credit assessment process. The Department closely monitors the local authority home loan. It offers the assistance or guidance that is required to support the processing of these loans. The Minister is committed to ensuring that the local authority home loan remains an effective support for homeownership for first-time buyers.

The Deputy has made some valuable points. As a former banker who is a qualified financial adviser, I know that a timescale can be put in place. For the mortgages that are approved there is nothing wrong with having approval in principle. This allows flexibility. We know it takes time to get a mortgage approved. Once it is approved it should be good enough as approval in principle for a minimum of six months so the person can shop around or see what is available. It should not be specific to one location or one particular property. There could be choice. We should look at the income criteria and make easy-step manuals available for people so they are able to do a ready reckoning and know what criteria they need to meet as part of the submission so it is not declined immediately and there is a mechanism to appeal in the system.

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