More than half of local authority home loan applications rejected

State-backed scheme provides loans to first-time buyers refused mortgage by traditional lenders

More than half the applications made under the Government’s Local Authority Home Loan scheme so far this year have been rejected.

The scheme, which provides State-backed mortgages to first-time buyers and fresh-start applicants who have been refused a mortgage or offered insufficient finance from traditional lenders, is one of several Government initiatives to help people get on the property ladder.

It provides mortgages for up to 90 per cent of the market value of the property. The Housing Agency assesses the applications but the relevant local authorities have the final say.

Figures obtained from the Department of Housing show that of the 1,310 applications received and assessed between January and the end of June this year, 586 were recommended for approval while 724 (55 per cent of the total) were recommended for rejection.


Parliamentary question

Cork County Council received the most applications (144) followed by Dublin City Council (117), South Dublin (88); Louth (85) and Fingal (84).

The Local Authority Home Loan scheme, which came into force this year, succeeded the similar Rebuilding Ireland Home Loan scheme.

The figures provided by Minister for Housing Darragh O’Brien, in response to a parliamentary question from Sinn Féin’s Eoin Ó Broin, show that 2,581 applications were received under the Rebuilding Ireland Home Loan scheme in 2021 of which 1,329 or 51 per cent were recommended for approval.

Some 228 applications under the Rebuilding Ireland Home Loan scheme were assessed in 2022 with 101 recommended for approval. While no new Rebuilding Ireland Home Loan applications are now being accepted, applications already in process are being honoured.

Support service

“The Local Authority Home Loan has been available nationwide from local authorities since January 4th 2022. Prior to that, the Rebuilding Ireland Home Loan was the mortgage available from local authorities,” Mr O’Brien said.

“The Housing Agency provides a central support service that assesses applications for the Rebuilding Ireland Home Loan, and its successor, the Local Authority Home Loan scheme, on behalf of local authorities and makes recommendations to the authorities to approve or refuse applications.”

“Each local authority must have in place a credit committee and it is a matter for the committee to make the decision on applications for loans, in accordance with the regulations establishing the scheme and the credit policy that underpins the scheme, having regard to the recommendations made by the Housing Agency,” he added.

House price inflation in the Republic slowed for the second consecutive month in May amid signs that the market may be cooling in the face of higher living costs. The figures for June are due to be published later this week and are expected to show a further softening in price rises.

Cost-of-living issues combined with higher interest rates – major central banks have been increasing their rates – have triggered a slowdown in growth and even a contraction in prices in some other jurisdictions.

Eoin Burke-Kennedy

Eoin Burke-Kennedy

Eoin Burke-Kennedy is Economics Correspondent of The Irish Times