Terence Flanagan (Dublin North East, Independent)
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180. To ask the Minister for Finance the rationale for a mortgage insurance scheme for first time buyers under the construction 2020 strategy when lenders already have access to indemnity insurance which is not a cost to the State; the way it will be financed if the proposal goes ahead; if the cost will be borne directly or indirectly by the first time buyer or the banks; and if he will make a statement on the matter. [24519/14]

Michael Noonan (Limerick City, Fine Gael)
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The Government recently launched 'Construction 2020: A strategy for a renewed construction sector'. The purpose of the strategy is to underpin the future competitiveness of the country, ensuring that we continue to be well-positioned to attract the inward investment that has been so important to our economic development.

The strategy includes the Government's desire for a return to sustainable levels of mortgage lending as part of a healthy market. This involves the consideration of measures to stimulate the development of housing. In order for developers to be supported, they need confidence that customers will be capable of accessing finance to purchase new builds. This means mortgage products being available to potential purchasers with an ability to support repayments.

In Ireland's recent abnormal housing market, lending volumes have declined dramatically. The banks are highlighting the lack of supply of houses in particular urban areas as a contributing factor for the lack of drawdown of approved mortgage facilities.  I would look upon the development of this initiative as being an aid to encouraging and facilitating the supply of new homes particularly for young families.  

In other jurisdictions, such as the UK and Canada, "mortgage insurance" markets have been developed to support bank mortgage lending, particularly to 'First Time Buyers'. Mortgage insurance allows banks to share the risk of mortgage lending, either with the public sector or with private sector insurance companies with the aim of increasing bank lending in general or to target groups.

My Department is committed, under this strategy, to examine the concept of a mortgage insurance scheme and how it might benefit new housing completions in the Irish market. The objective of any scheme would be to ensure adequate availability of mortgage finance on affordable terms for new completions, particularly for 'First Time Buyers', as the economy recovers.

 As the Construction Strategy mentions, my Department is undertaking an economic impact analysis which will assess the impact such a scheme would have on the Irish housing market, taking into consideration time limits, targeting 'First Time Buyers' or owner occupiers and focussing on new housing. The analysis will draw lessons from mortgage insurance initiatives undertaken in other countries and will include questions as to the appropriateness of a price cap as well as regional or geographic restrictions. Some schemes, currently in place in other jurisdictions, operate on a commercial basis. Once this analysis has been completed and presented to me I will consider next steps.