asked the MInister for the Environment if will consider (a) the further modification of the Housing Finance Agency scheme to allow 100 per cent loans in certain cases and (b) allow income assessment to be based on current income rather than on the income of the previous year.
Ceisteanna—Questions. Oral Answers. - Housing Finance Agency.
16.
Because of the way the housing loan scheme of the Housing Finance Agency operated and the necessity that a borrower should have a stake in his house from the outset. I do not consider that it would be appropriate to provide for 100 per cent loans.
The agency's scheme already permits, in certain circumstances, of a loan and its repayment being based on estimated income in the current year, rather than in the preceding tax year where a substantial increase in income has occured.
Would the Minister not accept that there are many families who could afford the current repayment level under the Housing Finance Agency scheme, but for whom the need to raise a deposit, even of the order of £2,000 to £2,500, makes the scheme prohibitive? Would he not consider the posibility of extending the scheme to give these prople the option under this socially desirable and very successful scheme which has allowed house purchase for people for whom it would up to now have been impossible? Would the Minister consider extending the scheme to 100 per cent, or perhaps 95 per cent, in some cases where facilies are married and have commitments, which raise difficulties in puttign together the deposit? These people whould be good risks in terms of big payments, given their tradition in relation to rent payments.
The reason for 100 per cent housing loans not being granted by the Housing Finance Agency is the need to ensure that there is adequate security for the loans advanced in the event of a default or partial default on the part of borrowers. The nature of the scheme is such that in the early years of the loan the borrowers's repayments of a minimum of 18 per cent of his income in the previous year will inevitably fall far short of meeting his interest liability. The unpaid interest will be added to his loan. If a borrower had a 100 per cent loan and defaulted in the early years of his loan, his increased indebtedness at that stage might not be matched by the realisable value of the house. Other reasons why, generally speaking, 100 per cent or near it in loans is not granted are first, the inflationary effect on house prices; secondly, the reduction in the number of loans that could be financed from any given capital allocation; thirdly, the diminshed contribution to housing from personal savings and the lower commitment of a borrower towards the purchase of his own house. Normally the SDA loan of 95 per cent and this percentage may be increased to 98 per cent for special category loans and 100 per cent where a persion offered a tenancy of a local authority house opts to but it that way. That is the widest possible ability for a person to acquire a house under these loans. For these reasons it is wise to have the limits set out by the Housing Finance Agency on those tenants.
While I accept some of the reservations outlined by the Minister is he aware that a scheme of 100 per cent and indeed 105 per cent loans operate in Wales where people can get a 105 per cent loan for the purpose of modernising a house? Is the Minister aware of such schemes and how they operate?
I am not aware of what is happening in Wales. Should the Deputy be aware of it I will certainly listen to the case she has to make and I will bring it to the notice of the Housing Finance Agency. I am sure they will be very interested to have their information.
Would the Minister agree with me that, if he looks ahead three or four years from now, many people who have availed of the funds of the Housing Finance Agency to get a house will, quite conceivably, be in deep trouble in relation to their indebtedness? In many cases, if a person loses his job in the first few years after taking this on, the sale price of that house, because of the depression in house values, will not enable him to repay his indebtedness. Does he not agree that it is a dangerous practice for young people to enter into those commitments without fully realising what they are taking on?
The success of the Housing Finance Agency is obviously reflected by the number of loans which have already been entered into by house purchasers and by the ability of people who might otherwise have to remain on long housing lists throughouts the country to purchase their own houses. This Housing Finance Agency has to a large extent not met with a very serious problem in that respect. I do not agree with the Deputy when he says that great problems will result in two or three years' time. The house purchaser is very fully informed of the commitments he is entering into. He is advised, if he consider he may end up as the Deputy suggests. We do not envisage difficulties arising in this scheme in a few years time.
Would the Minister not agree with me that, if he looks at the repayment commitments over the first five years of this loan, there is a very real danger of what I am saying happening? I have to be honest as a public representative——
This is a separate question. We are now debating this from another angle.
Young people do not realise what they are doing. I am surprised the Minister does not see it.
I am ruling that aspect out of order.
I noticed Deputy Gregory could talk for five minutes and I cannot talk for half a minute until I am knocked.
If the Deputy looks at the record for the last week he will see that he put up a fair showing.
(Interruptions.)
With regard to part (a) of the question I welcome the Minister's comments and I ask him to undertake what he suggests he might do, that is, to look at comparable schemes in other countries where 100 per cent mortgages have been on offer and obviously have been successful. My concern is that this scheme is made available to a larger number of people. Like Deputy Reynolds, I am perfectly satisfied that it has been an answer to a prayer for a lot of my constituents.
The Deputy must ask a question. i will not allow speeches from any of the House.
In relation to (b), the Minister outlined in his reply that there are occasional circumstances in which current income can be taken into account. It is bacause of that that I wonder if this current assessment could be allowed in other cases. I have in mind particualr examples where a person's income——
The Deputy must ask a question.
I am asking a question.
It is the longest question I have ever heard.
The Minister outlined exceptions which are made in some cases. Would he consider allowing assessment of the loan to be made on the basis of current income where there has been a change in job? It is only allowable at present when there has been a period greater than six months unemployment. If there weer a change in job——
The Deputy is obviously making a speech. I am moving to the next question.
May I ask the Minister——
I am sorry, Deputy. I am moving to the next question.
I have indicated several times that I wished to ask a question.
Deputy Flaherty had put down the question and but for the fact she abused the time I would have allowed the Deputy in. I will not allow speeches from anybody.
Question No. 17 postponed.