Dáil Éireann Debate, Wednesday - 11 November 2020
95. Deputy Ged Nash asked the Minister for Housing, Local Government and Heritage if local authorities are directly funded the actual cost to the authority of funding and administering the Rebuilding Ireland home loan scheme; if the scheme creates a contingent liability on the balance sheet of the local authorities; and if he will make a statement on the matter. [35569/20]
View answerLocal authorities offer fixed-rate annuity finance to eligible Rebuilding Ireland Home Loan (RIHL) borrowers at rates of 2.745% and 2.995% per annum, for twenty five and thirty years respectively. There is an additional mortgage protection insurance premium of 0.555%.
The 2.745% (2.995%) interest charged to RIHL borrowers can be broken down as follows:
- Local authorities borrow from the Housing Funding Agency (HFA) to finance their lending under the Rebuilding Ireland Home Loan. Borrowing costs relating to the financing of the RIHL scheme by the HFA are 1.50% for 25-year fixed mortgage and 1.75% for 30-year fixed mortgage.
- There is a contribution (0.995%) to the Local Authority Mortgage Arrears Resolution Process (LA MARP) Premium Fund. The LA MARP Premium Fund was established in 2012 to support local authorities in dealing with the shortfalls that arise in resolving unsustainable arrears.
- Finally there is an administration fee retained by the local authority of 0.25%.
Monies borrowed by the local authorities to finance RIHL lending are a liability to the local authority, as is the case for any borrowing by local authorities.
The final decision on loan approval with the RIHL is a matter for the relevant local authority and its credit committee on a case-by-case basis. Decisions on all housing loan applications must be made in accordance with the Regulations establishing the scheme and the credit policy that underpins the scheme, in order to ensure prudence and consistency in approaches in the best interests of both borrowers and the lending local authorities.
