Murphy seeks extra €600m for State mortgage scheme
Scale of Rebuilding Ireland Home Loan to soar due to greater demand
The Department of Housing wants to quadruple the size of its State-backed mortgage scheme to €800m.
The Rebuilding Ireland Home Loan scheme is targeted at prospective buyers who cannot get a bank loan. It has experienced higher-than-expected demand since it was launched in February 2018.
Originally €200m was set aside to be loaned out over a three-year period until 2020. However, the Department of Housing has now sought the permission of Finance Minister Paschal Donohoe to lend €200m a year between now and 2021.
The scheme became embroiled in controversy after it was reported that it had run out of funding.
However, Housing Minister Eoghan Murphy argued that only half of the original €200m had been drawn down.
In response to a parliamentary question during the week, Donohoe said that both his department and the Department of Housing were "in discussions" in relation to the scheme.
"When the Rebuilding Ireland Home Loan was initially being developed it was estimated that the draw-down of loans under the scheme would be approximately €200m over three years," Donohoe said. "From the data collated on the scheme to date, it is clear that there has been a greater demand for the loan than initially anticipated, as a result of which the scheme would require a further tranche of funds to be borrowed by the Housing Finance Agency if it is to continue.
"The Department of Housing has requested sanction for additional funding of €200m annually for 2019 to 2021."
Murphy has ordered a review of the scheme by his department.
The Housing Finance Agency is a State body that provides loan finance to local authorities. Customers can avail of three different offers from the loan scheme. The first is a 2pc fixed-rate mortgage for up to 25 years. The second is a 2.25pc fixed rate up to 30 years. The last deal available is a 2.3pc variable rate for up to 30 years.
Potential homebuyers can borrow up to 90pc of the value of a property. The maximum property value that can be borrowed for is €320,000 in Dublin, Galway, Cork, Kildare, Louth, Meath, and Wicklow. In the rest of the country the limit is €250,000.
So far, €106m has been drawn down by homebuyers, amounting to an average loan of €185,599.
A further €191.9m has been approved but yet to be drawn down, according to official figures.
Sunday Indo Business