Pádraig Mac Lochlainn (Donegal North East, Sinn Fein)
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Question 521: To ask the Minister for the Environment, Community and Local Government his views on the case of a person (details supplied) in County Donegal whose application for a council mortgage was rejected on the grounds that neither applicant had been in employment for the required two years; and if he will address this refusal in view of the fact that the family have a proven track record of timely payment of their current rent which is higher than the proposed mortgage repayment. [11150/12]

Jan O'Sullivan (Limerick City, Labour)
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Provisions governing mortgage lending by local authorities are set out under the Housing (Local Authority Loans) Regulations 2009 and associated credit policy. In assessing loan applications, local authorities take account of the household's ability to finance the loan based on their net household income. While, as a general rule, the credit policy provides that loans are not available to those in receipt of unemployment or social welfare benefits, an exception may be made where there is a primary income of a permanent waged/salaried nature, and where the secondary income is from the Department of Social Protection. In such cases, long-term social welfare payments can be considered, provided the long-term nature of the payment is confirmed. The final decision on whether to grant or refuse an applicant lies solely with the relevant local authority. All local authorities must satisfy themselves on the financial risk they are undertaking.

The relevance of the difference between projected mortgage repayments and current rental payments for a prospective purchaser is limited. It takes no account, for example, of the fact that while rent levels can be adjusted to reflect changing household income, mortgage repayments cannot. It does not take account of the additional costs taken on when a household becomes a homeowner thereby assuming responsibility for the ongoing maintenance of their home. While it is the case that the rate of refusal of applications for loan finance has increased, it is also clear that the loans issued since the introduction of the revised credit policy are more likely to be fully performing. I am happy that the current mortgage loan model is fair and adequately meets the needs of prospective borrowers and facilitates participation in housing acquisition initiatives such as the tenant purchase schemes.