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The Housing Minister Darragh O’Brien has said an rise in interest rates will not impact on targets for the provision of social housing.
His comments came after The Irish Times revealed the State’s Housing Finance Agency (HFA) is planning on raising their lending rates, prompting concerns that social housing targets could be missed due to a hike in interest rates.
Mr O’Brien on Saturday said approved housing bodies will be able to proceed with current plans and no planned social housing, affordable housing or cost rental scheme would be put in jeopardy.
The HFA told approved housing bodies last week that interest rates on their long-term fixed loans will increase.
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The agency’s 25-year fixed rate will go up by a half-point to 2.25 per cent, while the 30-year fixed rate is rising by a quarter-point to 2.5 per cent.
Non-profit housing associations rely on this lending to funding house construction. These bodies are due to provide 45 per cent of the new social homes envisioned in the Government’s Housing For All plan.
Mr O’Brien told RTÉ higher interest rates will not impact on future delivery, and the Government was willing to examine the need for extra funding to get the projects completed.
The Minister said: “I want to assure the approved housing body sector we are working to reappraise any future proposals that are there.”
He said the Government’s plan to deliver roughly 10,000 new build social homes every year up to 2030 remains on track.
“The approved housing bodies are very important to that....we will rework and reappraise any future proposals they feel may be impacted by this rate increase. We will address it.”
He said the HFA interest rates still represented a good deal for the Exchequer.
Mr O’Brien said any additional funding required will come from his department, potentially from the Housing For All budget, which contains multi-annual funding of over €4 billion per year.
“We have flexibility in that... because we have a multi-annual plan that’s fully funded, it allows us the flexibility on the capital side to be able to work through these changes as they move forward,” the Minister said.
He recognised that the plan was designed when inflation rates were much lower.
The Minister added that the HFA operates their financial structures and sets interest rates independently of Government.
Previously, HFA chief executive Barry O’Leary said the “modest” increases were due to “high volatility in the bond markets” - where the agency sources its funding - and the “substantial” increase in Government borrowing costs.