Willie Penrose (Longford-Westmeath, Labour)
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Question 11: To ask the Minister for the Environment, Heritage and Local Government if applicants are still required to have been refused a mortgage by two banks before being adjudged credit worthy for the purposes of the home choice loan scheme in view of the fact that the scheme is currently targeted at creditworthy first-time buyers; and if he will make a statement on the matter. [2466/10]

Michael Finneran (Roscommon-South Leitrim, Fianna Fail)
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The Home Choice Loan is intended not to provide an incentive for households to enter the housing market, but to provide access to mortgage finance to facilitate certain first-time buyers who have themselves decided to purchase a home at this time. The scheme is therefore designed to respond, in a very targeted way, to a specific set of circumstances in the housing market whereby prospective middle income first-time buyers, who would previously have been in a position to access mortgage finance from one of the financial institutions, are not currently in a position to do so, due to the impacts of the credit crunch and the general global curtailment of lending to households and businesses arising from it.

It is important to clarify that applicants under the Home Choice Loan Scheme are not deemed to be credit worthy by having been refused loan finance elsewhere. All applications are rigorously assessed having regard to an applicant's ability to pay, credit history and rating and all other aspects of a strict formal lending policy. An applicant's ability to pay is also stress-tested to assess their capacity to meet their repayments in the event of significant interest rate rises. It is only after all of these requirements have been met that an applicant can be deemed to be credit worthy for the purposes of the scheme.

The requirement for applicants to provide evidence of two refusals or inadequate loan offers from private financial institutions is in place to ensure that those credit worthy households who are in a position to have their loan finance requirements met by a private financial institution, do so.