Dáil Éireann Debate, Tuesday - 25 October 2016
182. Deputy Joan Burton asked the Minister for Finance if his attention has been drawn to first-time buyers who have saved house deposits in excess of 20% of the total value of the home they wish to purchase and are now unable to avail of the help to buy scheme as announced in Budget 2017; if his Department has investigated first time buyers in this situation; and if he will make a statement on the matter. [32001/16]
View answerThe Deputy will be aware that the Help to Buy Scheme announced on Budget day is intended to assist first-time buyers with obtaining the minimum deposit required under the Central Bank's macro prudential rules. The buyers that the Deputy refers to would already have sufficient cash resources to meet those requirements, except in cases where the operation of the loan to income aspect of the macro prudential rules mean that a larger deposit is necessary. The Deputy may be aware that in general, the latter provides that the total mortgage provided should not be greater than 3.5 times the income of the individual(s).
The scheme was initially designed to require a minimum loan to value ratio of 80% in order to qualify. However, the Central Bank of Ireland has indicated to my Department that a sizable number of first time buyers take out a mortgage with a loan to value ratio of less than 80% and that the minimum loan to value ratio set for the scheme could act to encourage such buyers to borrow more than necessary in order to avail of the scheme. Having considered the issue, I decided to reduce the minimum loan to value ratio to 70% and this change is reflected in the underpinning legislation in Section 8 of the Finance Bill as published.
