State loans scheme will benefit just 1,800 buyers
THE new State-backed mortgage scheme will only provide funding for around 1,800 first-time buyers, it emerged last night.
The Home Choice Loan scheme is designed to provide loans of up to €285,000 to workers who have been refused bank mortgages due to the "credit crunch".
But Junior Housing Minister Michael Finneran revealed that the funding available for the scheme was €500m -- meaning that just 1,754 people will be able to secure mortgages at the maximum rate.
"It's a mortgage at a commercial rate, there's no incentive in it, it's there solely to address the credit crunch and it seems like there is a lot of people in that category," he said.
Website
There have already been 2,600 visits to the homechoiceloan.ie website and 162 people have registered their interest since the scheme was announced on Budget Day.
The scheme is to apply to anyone earning more than €40,000 who has been refused a mortgage by the banks, and has been in permanent employment --or self-employment -- for two years. Successful applicants are to be offered standard variable rate mortgages of up to 30-years, with rates of between 5.35pc and 5.4pc. But they will only have to provide an 8pc deposit -- compared to the 20pc sought by banks.
Mr Finneran said that credit checks would be carried out to ensure that applicants had not obtained the 8pc deposit by taking out a bank loan.
"My intention here is to respond to the credit need of people who can genuinely afford a mortgage," he said.
Labour TD Roisin Shorthall has claimed that the scheme might see the Government become a "subprime lender".
Mr Finneran denied that the scheme, which only applies to new houses, was a sop to the building industry. Research had shown that 70pc of first time buyers buy a new home, he said.
The scheme is due to get under way in the next two weeks.
- Michael Brennan Political Correspondent
