Michael McGrath (Cork South Central, Fianna Fail)
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My Topical Issue matter relates to the Rebuilding Ireland home loan scheme. This is an effort to get to the bottom of where exactly in the process stands the proposed increase in the fund. As the Minister of State is well aware, the initial fund of €200 million which has been in place since early 2018 is not going to be anywhere near enough to meet demand. The Government has stated it has been surprised by the uptake and the level of interest. I do not see why it should be surprised. If it is in a position to provide people with a long-term guarantee on the interest rate, for example - it is an attractive rate - and also prepared to examine loan applications from people who are unable to access a mortgage at the level they need from a bank, it is no surprise that the level of interest in and demand for the scheme is very high.

Roughly since January this year, it has been evident that more money is going to be needed. We have been hearing since from the Minister for Housing, Planning and Local Government, Deputy Eoghan Murphy, that he has requested an extra €200 million each year for the next three years. That means that an extra €600 million will be required and it would be additional borrowing by the Housing Finance Agency, HFA. We were told that the Central Bank was to be consulted and it was. I put this issue to Governor Lane when he came before the Oireachtas finance committee in March. In essence, he confirmed that there was no objection from the Central Bank on the grounds of financial stability, given the relatively insignificant amount of money involved in the context of the overall mortgage market. That hurdle was cleared. Therefore, I am at a loss to know why we still do not have clarity on the eve of the Dáil going into recess.

The Minister of State will no doubt reply by stating the scheme is operating as normal and that all applications are being considered and approved and that funding is being drawn down, but that has not been the case in full in recent months. Some local authorities have publicly stated they are no longer accepting applications. The Minister intervened. He responded in the Dáil and issued an instruction to the local authorities. They must accept applications, process them and continue to approve grants which will continue to be drawn down. However, his cannot go on forever. If we examine the figures, about 4,200 applications were assessed up to the end of May and slightly more than half have been approved. A fraction of the approved grants have been drawn down. The overall sum drawn down is about €140 million. There is not, therefore, enough money in the pot to meet the funding requirements of approved applicants. I know that there is a time lag and that it can take a while for people to go through the process and be ready to draw down the money. However, that day is coming. There is a suspicion that the consideration of applications has been slowed down because there is a squeeze on funding. I want the Minister of State to give a categorical assurance to the House that all local authorities are open for applications, accepting them, processing them, issuing approvals and that loans are being drawn down unimpeded.

I turn to my real purpose. When are we going to have clarity on whether the extra funding of €600 million will be approved? We know that the Central Bank does not have an objection to it. We also know that the HFA has access to credit and can draw down additional moneys. Where exactly is the blockage and when is the issue going to be resolved?

Michael D'Arcy (Wexford, Fine Gael)
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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.

Eoin Ó Broin (Dublin Mid West, Sinn Fein)
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Excellent.

Declan Breathnach (Louth, Fianna Fail)
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Live horse and get grass.

Michael McGrath (Cork South Central, Fianna Fail)
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Will the Minister of State tell us what the word "very" means in the context of his reply? Perhaps he has some inside knowledge, but he is not in a position to share it with the House. Looking at the last paragraph of his reply, the Minister of Stated remarked: "In that regard, the Minister and his officials are finalising the assessment, with a view to announcing a further tranche of funding very soon". Does that mean that a decision has been made in principle to announce an additional tranche of funding? My reading of that sentence is that the process is being undertaken with a view to announcing additional funding. Will the Minister of State clarify if that is the case? If it is the case, it will reassure people. Thousands of people who have either applied for or are interested in applying for the scheme may have been discouraged from doing so because of the publicity which suggests the scheme will run out of money very soon. We know that €140 million of the €200 million allocated was drawn down by May. We have not received data since. We also know that more than 2,000 applications have been approved, but many of the applicants have not drawn down funding. If all of the approved applications are called in by the borrowers, the money will not be available. Will the Minister of State provide clarity on the timeline which he described as "very soon"? Will he also reassure the House and applicants, including intending applicants, that every local authority continues to operate the scheme in full? I am referring to every local authority accepting applications, processing them in conjunction with the HFA, approving them and making funding available to those who have loans approved. I ask the question because it seems that the entire process that was slow to begin with has slowed down further. That raises concerns that the slowdown has occurred because the budget and cash flow are being managed.

Perhaps the Minister could provide clarity.

Michael D'Arcy (Wexford, Fine Gael)
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I am not trying to be glib but "very soon" is not months and it is not weeks. The Deputy can take-----

Michael McGrath (Cork South Central, Fianna Fail)
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So is it days?

Michael D'Arcy (Wexford, Fine Gael)
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-----from that what he wishes. I am not here to announce the actual scheme but I am confident that the continuation and the extension of the scheme will occur. I know from my conversations with the Minister, Deputy Eoghan Murphy, that this scheme seems to have caught the Department by surprise. I am surprised at the surprise. It is a 40-year loan at a fixed rate of 2.2%. There is no such offering anywhere else. If a person cannot meet the other lenders' criteria, this is a superb chance for him or her to get the first opportunity on the housing ladder. It will be very soon. The message went out very clearly from the Department of Housing, Planning and Local Government for the local authorities to continue to accept applications. While the tranche of funding was not there to meet the demand, I am satisfied that it will be there.