merrion street

13,700 households to benefit

Mr. Simon Coveney T.D., Minister for Environment, Community and Local Government, has welcomed today (13 June, 2016) the decision of the Housing Finance Agency (HFA) to reduce the mortgage interest rate by 0.25% for variable-rate local authority borrowers. The HFA is a State body under the aegis of the Minister. The Minister has instructed that the reduction be passed on by local authorities directly to borrowers.
13,700 households will benefit from the reduction, which takes effect from 1 July.
The Board of the Housing Finance Agency decided on Friday (10 June) to reduce mortgage interest rates for local authority borrowers by 0.25%. This is the sixth consecutive interest rate decrease, and brings the rate down to 2.3%, which is some 1.7% below the average variable mortgage rate of 4%.
Minister Coveney said: “I am delighted with the HFA’s decision to reduce the local authority mortgage interest rate. As a result, a local authority mortgage holder with a €100,000 mortgage will have an extra €21 in their pocket each month. The rate cut is evidence of an extremely competitive path to home ownership being offered by the HFA.”
“I am also pleased to announce that the HFA finalised a €150 million loan facility with the Council of Europe Development Bank (CEB) on Tuesday last,” added Minister Coveney’. Minister Coveney’s predecessor gave approval to the HFA to agree this new loan facility with the CEB on 19th April of this year, the arrangements for which have now completed (as of 7th June). By way of background on this - the Council of Europe Development Bank (CEB) agreed to make available a €150 million loan facility to the HFA in respect of the financing of, “Social Housing for Low Income Persons” for which Ministerial approval was required. Under section 10 of the Housing Finance Agency Act 1981 (the 1981 Act), borrowings by the HFA are subject to the consent of the Minister, and of the Minister for Finance. The borrowings are to be guaranteed by the Minister for Finance, in accordance with powers under Section 11 of the 1981 Act. This Guarantee, in respect of the CEB facility, was signed on behalf of the Minister for Finance, who consented to the loan facility. The Council of Europe Development Bank loan finance is to be provided for lending at competitive rates for the provision of social housing by Approved Housing Bodies. The provision of this funding is consistent with the Social Housing Strategy 2020, which envisages the HFA as contributing to the delivery of the targets set out in the Strategy. The CEB funding is provided on a similar basis to a €150m facility made available to the HFA in 2015 through the European Investment Bank (EIB).
The Minister also welcomed the reduction of the HFA’s Home Choice Loan mortgage interest rate by 0.25% to 3.25%. The Home Choice Loan Scheme was established in 2009 to enable middle-income first-time buyers purchase a home, and offers a maximum loan amount of €285,000.
Information for editor:
The Housing Finance Agency (HFA) plc. is a non-commercial semi-state company under the aegis of the Minister for the Environment, Community and Local Government, limited by shares under the terms of the Housing Finance Agency Act 1981, as amended. The principal objects of the company are to advance funds to local authorities and approved housing bodies (AHBs) to be used by them for any purpose authorised under the Housing Acts 1966 to 2015 and to borrow or raise funds for these purposes. All of the issued share capital of the HFA is beneficially owned by the Minister for Public Expenditure & Reform.
Local authority mortgages
17,845 local authority mortgages have issued to over 28,000 named borrowers. Such households would invariably accommodate other dependants. Approximately, 13,700 of these local authority mortgages are charged at a variable mortgage interest rate. The remainder of the mortgages have interest rates that are fixed or are set in accordance with a tailored loan scheme specific to local authority housing.
The main house purchase loan currently available from local authorities is the standard annuity mortgage, targeted at lower income first time buyers. The terms and conditions governing the operation, including eligibility terms, of annuity mortgages are set out in the Housing (Local Authority Loans) Regulations 2012. These are available on the Department’s website at the following link:
http://www.environ.ie/housing/grantsfinancial-assistance/local-authority-loans/local-authority-loans. Further information is available local authorities directly.

The Department’s website also includes data relating to the:
number of new local authority loans approved and paid; and
value of new loans offered.
It is broken down by year and by house type (whether new or second hand). It can be found here:
http://www.environ.ie/housing/statistics/house-prices-loans-and-profile-borrowers/local-authority-loan-activity