Rebuilding Ireland Home Loan Scheme Extended and Mortgage Lending is Up

The industry news we have been sharing over the past few weeks has been broadly negative so it is good to start into the new season (summer is well and truly over) with some positive news. Firstly, after a bit of a fiasco earlier in the year, “hundreds of millions” have now been allocated to city and county councils all around Ireland to get the Rebuilding Ireland Home Loan Scheme back on track. You might recall that an initial sum of €200 million was allocated for the three-year lifespan of the scheme, however, it transpired that €224 million was essentially promised/committed by a handful of local authorities within the first 13 months of the programme. The scheme was in limbo for the last few months, with most local authorities putting their application processes on hold. Earlier this week, the Irish Times reported that Dublin City Council has had its allocation for the State-backed mortgage scheme increased to €130 million from the €50 million that was allocated initially – and this is understood to be for the next year only i.e. not for the entirety of the scheme. Also, Fingal County Council has seen its funding rise from €20 million to more than €81 million up to the end of 2019. Similar increases in allocations are currently being issued to local authorities across Ireland, in line with homebuyer demand. By way of quick reminder, under the scheme, first time buyers – with an income of up to €50,000 or couples earning up to €75,000 – who have had mortgage applications rejected by a bank can apply to borrow up to 90% of the value of a home, availing of interest rates as low as 2 per cent over 25 years. It is important for developers to note the maximum purchase prices in each area. In order for homebuyers in Dublin, Cork, Galway, and in the commuter counties of Kildare, Louth, Meath and Wicklow, to avail of the loans, the value of the homes must not exceed €320,000. For the rest of the country, the maximum purchase prices are set at €250,000. This is good news for homebuilders, developers and sellers – and indeed for potential homebuyers.

And some further positive news for the housing market; the number of new mortgages approved by lenders in Ireland rose significantly in July. More than 5,129 new home loans were approved throughout the month, which represents a 14.5% increase when compared to June and a 21.5% rise on the same month last year. Significantly, the value of these mortgages also increased (12.6% higher than June 2019 and almost 25% higher than July 2018). These are important stats given the slowdown in property transactions for the first six months of the year. As always, we would be interested to know about your experiences in the marketplace.

Ian Lawlor
086 3625482

Director / Business Development
Lotus Investment Group