Terence Flanagan (Dublin North East, Fine Gael)
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Question 47: To ask the Minister for the Environment, Heritage and Local Government the number of formal applications to the home choice loan scheme to date in 2009; the cost to administer the scheme to date in 2009; and if he will make a statement on the matter. [42783/09]

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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More than 1,400 prospective purchasers have formally registered interest on the dedicated home choice loan website and, to date, 44 applications have been made. Of these applications, 27 have been declined and four approved, with two loans now drawn down. Three applications have been withdrawn, while a decision is pending on ten applications, on which further information has been sought from the applicant.

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 approximately €280,000 have been incurred to date in establishing the scheme which have been met from within existing resources. The projected costs for the remainder of 2009 and 2010 are €10,000 and €20,000, respectively. A significant element of the total cost was incurred in the development of the loan processing model that applies to the home choice loan but which has also now been used in the development of revised systems for processing and credit checking of normal local authority house purchase loan applications under other schemes such as the affordable housing and shared ownership schemes. In addition, it is expected that ongoing administrative costs will be met from normal lending margins.

The scheme is targeted at creditworthy first-time buyers of new houses only. As I have indicated on a number of occasions since it was introduced, the focus on new houses was intended to reflect the fact that the significant majority of first-time buyers had tended to opt to purchase new houses. However, I have also stated consistently that the terms of the scheme will be kept under review and that particular attention will be paid to any changes in purchasing tendencies among first-time buyers generally. More recent data suggest the purchasing tendencies of first-time buyers have shifted significantly in recent months, with the majority now tending to purchase second-hand homes, possibly as a result of improved affordability on foot of price decreases and historically low interest rates. Therefore, I have instructed my Department to make arrangements allowing for the extension of the home choice scheme to include second-hand houses. I do not expect additional administrative costs to arise from the extension of the scheme.

Terence Flanagan (Dublin North East, Fine Gael)
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As the Minister of State will acknowledge, the numbers involved are extremely low. A total of 1,400 prospective purchasers have formally registered an interest, of whom only 3%, or 44, have made applications and only two loans have been drawn down thus far. As the numbers are not stacking up, customers are not voting with their feet and homeowners are not satisfied with the loan scheme, will the Minister of State consider winding it down? It is almost one year old. The Minister of State should consider other initiatives such as the incremental purchase scheme, as well as revising the shared ownership scheme.

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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While I appreciate the points made by the Deputy, I remind him that I also introduced the incremental purchase scheme. I do not intend to close down the scheme and, as I noted, I intend to extend it as and from 1 January 2010 to the second-hand house market. The scheme is in place with no incentive. The most important reason for its existence is to support people who wish to buy a house and who could make repayments on it but who lack the deposit sought from them by many financial institutions. It is in place as an alternative and the information available to me does not show there is as much credit available in the mortgage area as people would wish. In addition, it is important to recognise there is no great sentiment in the market for the purchasing of houses.

Terence Flanagan (Dublin North East, Fine Gael)
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Given that the scheme is not working, the Minister of State should advise Members as to the initiatives he is taking to ensure the banks will begin to lend again to potential homeowners. I ask him to revert to the House in the new year with new initiatives to help people.

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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It is well recognised that the Government has entered into discussions with the financial institutions. The Deputy will acknowledge that capital injections have been made into the main banks.

Terence Flanagan (Dublin North East, Fine Gael)
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However, they are not lending.

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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There is ongoing contact and have been public statements from the Taoiseach and others on the matter. My officials and I have regular meetings with the Irish Banking Federation and my decision to extend the loans scheme to second-hand houses is based on its data.