State home-building scheme sees loan approvals grow to €539m

Home Building Finance Ireland has committed 74% of its €730m capital

The majority of HBFI-funded properties are two- and three-bed homes aimed at first-time buyers. Photograph: iStock

The majority of HBFI-funded properties are two- and three-bed homes aimed at first-time buyers. Photograph: iStock

 

The State agency established to fund the delivery of new homes accelerated loan approvals to €539 million in the first half of the year, a 36 per cent increase on the total approvals at the end of 2020.

Home Building Finance Ireland (HBFI) said it had now committed 74 per cent of its €730 million capital in its first 2½ years of operation. The body approved funding for 2,477 homes in 54 developments in 17 counties. A total of 193 HBFI-funded units have already been completed and sold.

More than a quarter of HBFI-funded units are for social housing. The majority of HBFI-funded properties are two- and three-bed homes aimed at first-time buyers. The average size of the loans is €10 million, with an average term of 21 months.

The first drawdowns have taken place involving €291 million, covering 19 developments and 1,364 units where construction is in progress or has been completed.

Finance

HBFI was established by the Government in late 2018 to address a shortfall in finance available for the construction of residential housing by providing finance at market rates to commercially viable developments.

Following the beginning of the Covid-19 pandemic last year, the €200 million momentum fund was introduced in May 2020 for larger prime developments that would ordinarily have been funded by the mainstream lending institutions.

That initial €200 million was fully committed within three months, and a further €100 million was added – the deadline for applications was extended to June 2021.

Progress

“We are making strong progress in deploying the capital needed to deliver thousands of new homes for owner-occupiers, renters and social housing. We have widened our product range to make it easier for house builders to complete units quickly and get keys in the hands of people who are looking for a new home,” said HBFI chief executive Dara Deering.

“We recognised the challenges the sector faced due to Covid-19 and responded with a product to support continued supply of new homes. Just 2½ years since we opened for business, we are already close to approving 75 per cent of the €730 million capital that HBFI is initially making available.

“We are ready to add significant capacity to match demand in the coming years if required.”

Minister for Finance Paschal Donohoe said the update highlighted that HBFI has successfully established itself as a strong presence in the residential development finance market in Ireland.

“HBFI is, therefore, providing funding across a range of development sizes and is enabling construction to proceed on these projects to deliver much needed supply,” he said.