Rebuilding Ireland Home Loan scheme
Sir, – Your correspondents (January 24th) raise several concerns about the Rebuilding Ireland Home Loan scheme that are not correct. I would like to take this opportunity to correct these misinterpretations.
The first of these relates to the claim that the Rebuilding Ireland Home Loan scheme will do nothing to increase housing supply. This suggests the Government has chosen to introduce measures to improve the accessibility of house purchase for average earners (the purpose of the Home Loan scheme) instead of taking action to increase housing supply. Several new measures to increase housing supply were announced on Monday in tandem with the Home Loans scheme, including affordable housing for sale and for rent. Minister for Housing Eoghan Murphy has provided additional funding for social housing which will enable a significant increase in supply from this sector.
Your correspondents suggest that increased housing supply alone will resolve housing affordability problems. New house building rates are certainly too low and need to increase but on its own increased housing supply will not enable average earners to access home ownership, particularly in urban areas because they cannot secure sufficient, affordable mortgage finance and therefore cannot compete with investors who are also buying starter homes. The Rebuilding Ireland Home Loan is specifically designed to support households with incomes that are too high to qualify for social housing but too low to access sufficient mortgage credit to buy a house currently. These households do not receive any Government help with their housing costs but in many cases have to pay high private rents, which are rising much faster than wages and are not affordable. The Home Loan is intended to provide these households an affordable and sustainable alternative to unaffordable rents – a very low-interest mortgage, at long-term fixed interest rates which will remain predictable long into the future. The terms of the scheme specify that mortgage repayments must be less than one-third of household income.
Your correspondents raise concerns that public money is being spent on the Home Loan scheme which could be devoted to more worthwhile causes. In fact, over the long term, the costs to the exchequer of this mortgage facility are zero. It is funded by State-guaranteed borrowings raised by the Housing Finance Agency (HFA), but these borrowings will be repaid in full by Home Loan recipients. Mortgage interest rates will cover both the full costs of both repaying these borrowings and all associated administrative costs. Although the HFA is a State agency, it receives no funding from Government for its running costs. These are covered entirely by a small fee added to interest rates on the loans it provides for affordable mortgages and social housing provision. – Yours, etc,