Colm Burke (Cork North Central, Fine Gael)
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This is not the remit of the Minister of State, Deputy Rabbitte. I thank Deputy Rabbitte for all the work she has done on the housing area. It is unfortunate, on the second last day before we finish up, that the Minister of State is asked to deal with this housing issue. It is an extremely important issue.

There are a large number of people getting caught in the middle-income groups. They cannot get bank loans and they cannot get a local authority house. We have raised a criterion in relation to qualifying for a local authority houses but what is frustrating - it is one of a number of problems I have had over the past number of months - is the timescale in considering loan applications by local authorities.

It is too much of a delay. People have lost purchases because there was a substantial delay in signing off loan applications by the local authorities.

We must also look at the income criteria. In the past two weeks I had a case sent to me in which the people involved met all of the qualifying criteria. They were saving very hard. They were paying rent of €1,600 per month. If they had been able to draw down the loan they applied for, they would have ended up making repayments of €1,200 a month but they were refused. I do not understand why this is happening. My understanding is that a large number of applications are being turned down by local authorities throughout the country because of the smallest of issues. We need to look at all of the local authorities and have a full review to see what is the timescale from when an application is received to a decision being made. What are the criteria local authorities are using to turn down loan applications?

In another case a person was turned down who had full capacity to make the repayments that would be required. He was turned down because three or four years ago he defaulted on the repayment of a personal loan for three months. That loan was fully cleared. It is accepted that he did default because he ran into difficulties when changing jobs and he did not pay. Now it is being taken as an excuse for not giving him a home loan.

These are all people who are working hard. They are saving. They are trying to put the package together for themselves so they will not be dependent on the State. Here we are. These are people who are not reliant on H.AP They are not reliant on local authority support for the rent they pay. We are turning down their loan applications. I want the Department to review what has happened over the past 12 months with regard to loan applications. How many loan applications were made? How many were turned down? Is there a need for a more detailed review of local authorities on an ongoing basis with regard to home loans?

I recall acting as solicitor in the purchase of three houses a week. One man with four young children wanted to buy a semi-detached house. The deposit on the house was £100, which he did not have. He was able to borrow it from the bank and buy a three-bedroom semi-detached house. We now have a situation whereby if the same person came in to me in the morning with €100,000 in the bank a local authority would not even consider him for a loan. We need to look this. How can we facilitate people who are making every effort to look after themselves and not be dependent on the State when we find the State is not giving them the support they require?

Anne Rabbitte (Galway East, Fianna Fail)
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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.

Colm Burke (Cork North Central, Fine Gael)
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The figures the Minister of State produced are interesting. There is a 57% refusal rate. This is 57% throughout the entire country. We must remember this is an average. I understand that the refusal rates of certain local authorities are as high as 70%. This is the concern I have. If the average is 57%, it means some local authorities are proactive in assisting people. I ask that the Department look at the local authorities where the percentage is much higher than the average of 57%. I still think 57% is a very high refusal rate. We need to look at this.

If we build a local authority house, and this is not a criticism of people who avail of local authority housing, it costs the State €300,000 on average. This is being provided by the State. Here are people who are saving and once they get the mortgage they will not be dependent on the State for support. We need to be far more proactive in trying to see how we can streamline this and make sure that local authorities do not delay processing loan applications. We must also make sure that common criteria are applied by all local authorities and that one does not have a 70% refusal rate while another has a 35% refusal rate. This issue needs to be looked at.

Anne Rabbitte (Galway East, Fianna Fail)
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I thank the Deputy again. I have listened to the issues he has raised. Local authority mortgage lending has been successful to date. Between February 2018 and September 2022, approximately €517 million was drawn down by almost 3,100 borrowers through the Rebuilding Ireland home loan and the local authority home loan. Of this €517 million, €30 million was drawn down by 72 borrowers under the new local authority home loan up to September 2022. It is important to note the approval rate has no direct comparator in commercial bank lending as bank refusals are not available by comparison. We cannot see whether local authority home loan refusals are relatively high. A detailed credit assessment process is required to ensure that applicants do not take on unsustainable debt. I will take on board what the Deputy has asked regarding whether there could be a county-by-county assessment to see whether there is standardisation throughout the country. I will bring this to the attention of the Minister, Deputy O'Brien.

Colm Burke (Cork North Central, Fine Gael)
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I appreciate that the Minister of State is dealing with this matter. I am sure she is familiar with this very important issue in her area. We have a lot of people who are working very hard to meet the criteria and to make sure they do not have to rent for the rest of their lives.