Dáil Éireann Debate, Wednesday - 7 October 2020
93. Deputy Richard Bruton asked the Minister for Housing, Local Government and Heritage his plans to make changes in the limits on the price of the house on which an affordable loan can be obtained; and if he will make a statement on the matter. [29167/20]
View answer94. Deputy Richard Bruton asked the Minister for Housing, Local Government and Heritage the present rate of interest which is charged on an affordable loan; what this represents in monthly payments per €1,000 borrowed on a 25 and 30 year mortgage; if there are additional charges added for insurance and so on; and if he anticipates the potential for the reduction in these charges in the coming months. [29168/20]
View answerI propose to take Questions Nos. 93 and 94 together.
The Rebuilding Ireland Home Loan is the only government-backed loan product currently available.
It was introduced following a review of the two existing local authority home loan schemes, the House Purchase Loan and the Home Choice Loan, from 1 February 2018. The loan enables credit worthy first time buyers to access sustainable mortgage lending to purchase new or second-hand properties in a suitable price range.
The purchase or self-build of a property must not exceed the maximum market value applicable for the county in which it is located:
- €320,000 maximum purchase price for properties in Cork, Dublin, Galway, Kildare, Louth, Meath and Wicklow (maximum loan amount of €288,000);
- €250,000 maximum purchase price for the rest of the country (maximum loan amount of €225,000)
Initially, interest rates were set at a fixed rate for terms up to 25 years of 2.0%; fixed rate for terms up to 30 years of 2.25%; and variable rate for terms up to 30 years of 2.3%. On 15th August 2019, the variable interest rate option was discontinued - it had accounted for less than 1% of RIHL drawdowns. On 15th January 2020 revised interest rates were set; loans with terms of up to 25 years have a fixed interest rate of 2.745%; and loans with terms of up to 30 years have a fixed interest rate of 2.995%. Per €1,000 borrowed on a 25 and 30 year mortgage, the monthly interest charges are €2.29 and €2.50 respectively.
In addition there is a requirement to take out Local Authority Mortgage Protection Insurance, which costs 0.555%. Therefore, the overall cost of RIHL loans are 3.3% and 3.55% for 25 year and 30 year loans respectively.
The local authority MPI is a group scheme and is designed to provide an appropriate level of insurance cover to those who wish to avail of the Rebuilding Ireland Home Loan. It offers a number of additional features over and above the standard MPI products available on the market. Standard MPI products are individually priced, based on a member’s age, amongst other factors, whereas the local authority MPI scheme is a group arrangement, offering a single group rate per €1,000 sum assured to all participants in the scheme.
The scheme also provides other benefits over standard MPI products. These include the payment of mortgage repayments if there is a valid claim as a result of disability; an additional payment of €3,000 in the event of a member’s death, separate to life cover; and members are also covered for death up to age 75 rather than 65 as is the case under standard MPI cover.
There are currently no plans to change the parameters of the Rebuilding Ireland Home Loans at this time.
