Dáil Éireann Debate, Wednesday - 14 December 2022
79. Deputy Neasa Hourigan asked the Minister for Housing, Local Government and Heritage if he will consider expanding the number of mortgage protection insurance providers available to local authority home loan applicants under the compulsory local authority mortgage protection insurance scheme; and if he will make a statement on the matter. [62484/22]
View answerThe Local Authority Home Loan is a Government backed mortgage for those on modest or low incomes who cannot get sufficient funding from commercial banks to purchase or build a home. It has been available nationwide from local authorities since 4 January 2022. The loan can be used both for new and second-hand properties, or to self-build.
The local authority mortgage protection insurance (MPI) scheme has applied to all house purchase loans approved by local authorities after 1 July 1986, including the Local Authority Home Loan.
One of the conditions of local authority lending is that it is obligatory for all local authority borrowers who meet the eligibility criteria to join the local authority MPI scheme. Altering this condition would have a negative impact on the scheme and increase the cost for all existing borrowers. A local authority housing loan applicant, who is not eligible for the local authority MPI scheme, must source a suitable comparable individual MPI policy from the market.
The local authority MPI is a group scheme provided by a single insurer. Providing MPI through a single provider simplifies the administration of the scheme for local authorities, ensures that all local authority borrowers are treated equally and receive the same cover at the same cost, and enables the local authority sector secure value for money through economies of scale. I have no plans to change this policy.
The MPI scheme is subject to periodic review and competitive tendering in accordance with the terms of EU Directives relating to the award of public service contracts. This is to ensure that the most appropriate cover at the best value for money is secured for local authority borrowers over the entire life of their mortgages. The most recent public procurement competition for the provision and administration of this MPI scheme was conducted by the Local Government Management Agency. The contract resulting from this open tender competition will come into effect from 1 January 2023 and is due to expire on 31 December 2027.
As part of this new contract, I issued a ministerial direction that from 1 January 2023, the level of cover for new LA MPI applicants will change from life and disability cover to life only cover. Existing local authority borrowers who currently have life and disability cover, will retain this level of cover under the LA MPI scheme. However, in the later part of 2023, this cohort will be given the opportunity to change their level of LA MPI from life and disability cover to life only cover, should they wish to do so. This process will be managed by the new scheme administrator.
