More than one in two applicants fail to secure affordable home loan in Dublin

Just 60 affordable home loans have been drawn down right across Dublin city and county, new figures show, despite more than 1,000 applicants for the scheme which launched last February. The figures also show that more than one in two applicants are failing to secure approval right across the capital for the scheme, with a success rate of less than 20 per cent in Dún Laoghaire Rathdown.

The Rebuilding Ireland Home Loan scheme allows putative first-time buyers to avoid Central Bank loan restrictions and lock in to low-cost interest rates of as low as 2 per cent by applying for a home loan with their local authority, and is part of the Government's three-pronged approach to make homes more affordable. However, the scheme has been criticised for being too difficult to access, and is currently the subject of a review from the Department of Housing.

Following queries from The Irish Times, the lowest drawdown rate across Dublin has been found in Dún Laoghaire Rathdown, which covers areas such as Sandyford, Stillorgan and Blackrock, and has some of the highest house prices in the country. The local council said that just one affordable home loan has been drawn down since the end of September 2018, at a value of €227,000.

Rejected

In total, the council said it had received some 82 applications, but 17 of these were rejected outright on the grounds that they were “incomplete and/or ineligible”. Some 16 loans were approved in principle, totalling some €3.7 million, for an average loan size of about €230,000.

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This means that less than one in five applicants had their mortgage request approved at this point, indicating a rejection rate of more than 80 per cent, although the rejection rates may fall in time as applications are processed and approved. A delay in processing applications has been another criticism of the scheme.

In south Dublin, encompassing areas such as Rathfarnham, Lucan and Clondalkin, just nine applicants have drawn a loan.

Overall, South Dublin County Council had received some 240 applications by mid-October, of which 69 applicants have received provisional approval. However, just nine applicants have successfully drawn down a loan.

Local councillor Trevor Gilligan has queried the high rejection rates.

“A rejection rate of 71.25 per cent seems quite high and this needs to be looked at. This is an affordable housing scheme so we must ask why is the refusal rate so high?” he asked.

Fingal County Council, which covers areas on the north side of Dublin such as Swords, Blanchardstown and Malahide, had received 340 applications by mid-August. It reported a 40 per cent approval success rate, and 17 mortgages were drawn down at an average value of €221,449 each.

Busiest to date is Dublin city, where 345 applications were received by end-September, and of these, 225, or 65 per cent,were approved in principle, indicating a rejection rate of just 35 per cent. Some 33 mortgages had been drawn down, at an average value of €212,840, by this date.

Rejections

Figures from the Department of Housing show that the scheme had attracted 2,933 applications country-wide since last February. Of these, just 1,134 have been approved, indicating a success rate of just 38.6 per cent.

For Dublin city and county, the average figure is slightly higher, with a success rate of 45 per cent based on 1,007 applications.

One of the challenges of the scheme has been the requirement to take out mortgage protection through the council to which the homebuyer is applying. This can add monthly costs of as much as €133.20 on top of a mortgage, which can affect an applicants’ ability to qualify for the loan – and also make it less affordable, as mortgage protection is available at a much lower cost in the open market.

Another factor noted by Mr Gilligan is the long delay between decisions and appeals.

“So whilst many are not refused, the delay simply means applicants must seek alternative arrangements, from banks, loans from friends, relatives etc . . . so they may as well have been refused,” he said, adding that people selling a home won’t wait for an applicant to get mortgage finance.

“Home sellers won’t wait for appeals committees, if an application takes too long, sellers will simply go to the next bidder.”