Kilkenny County Council has been granted approval to draw down an extra €5m from the Housing Finance Agency for loan purposes despite applicant numbers being “slightly down”.
The matter was approved by members at this month’s full meeting of the local authority.
Head of Finance at the Council, Martin Prendiville, said the €5m loan “will see us through the next of this year and into the next”.
Since February, local authorities have been offering Rebuilding Ireland home loans, a Government backed initiative which aims to offer low-cost mortgages to purchasers who have difficulty in securing finance from the main lenders.
In response to questions from Cllr Melissa O’Neill, Mr Prendiville confirmed that not all of the €4m from the last loan has been used but it is expected that that will be used up in the next few months with approximately €1m left of the loan.
With regard to the additional loan of €5m, he added: “This is so we can lend to successful applicants.”
On the amount of loans he said that the “numbers are slightly down” but the local authority are still issuing a significant number of loans on a monthly basis.
In line with Central Bank rules, borrowers are able to borrow up to 90% of the purchase price, up to a maximum purchase price of €250,000 in Kilkenny.
Applicants must also have proof that they have been turned down for a mortgage, or were offered “insufficient” finance, by two lenders.
People who applied for a local authority home loan prior to February 1 will be processed on the old scheme.
Cllr David Kennedy asked for a full breakdown of applications to the Council mortgage facility as he says a lot of people are coming to him looking for a Council loan but are getting “held up by the 10% deposit”.
The councillor asked for a general breakdown of the people applying as he is “dealing with a good few people who don’t meet the criteria”.
Mr Prendiville said there is a lag in terms of applications through the system and then the funds being drawn down.
The Council pays out between €3m and €4m each year in home loans. The local authority currently has over 600 loan accounts.
It borrows the money from the HFA and then lends it out to the successful home loan applicants.
It also tries to ensure it has financial head room to ensure the finances are there to pay out home loans coming down the track and these loans must get members’ approval to borrow the money from the HFA.
Speaking after the meeting, Cllr Kennedy said: “I have no problem with this loan but I’m not happy that people who fail to get a mortgage through the main banks - but who earn a working wage - still have to have 10% of the house value of the mortgage that they are looking for from the Council.
“It makes it very hard for people who 12 months’ ago would have had no problem getting one from the Council.”
Unlike the Help to Buy grant, which is restricted to new homes, the new scheme can be used to purchase a new or second hand home, or finance the construction of a self-build.
In Kilkenny, the total value of mortgage loans paid out in 2017 was €3.4m.
The total value of mortgage loans paid out year to date 2018 was €2.4m.
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