We listened with interest to Housing Minister Eoghan Murphy’s offer for a new initiative on housing.
The 1000 mortgages offer at long term fixed rates of over 2 per cent for year one is very attractive and should suit many in the provinces, where incomes are not too high and property prices reasonable.
For persons to qualify they must be refused by banks and have rejection letters.
This seems to be an unusual condition and could this be reviewed we ask.
Sometimes people do not even try banks as they know their credit rating or income excludes them.
Perhaps there should be a more open situation where buyers can opt for the lower rate of interest offered by the state.It gives the banks first call and that maybe a disadvantage.The amount of mortgages on offer is low at just 1000 for first year.
Surely that could be expanded to more, as the scheme expands to having say 5,000 plus per annum.
Will a special purpose bank do it or will local authorities be involved , they should be perhaps, as they have the finance functions in housing departments with local authority houses.
Banks have been slow to lend as the Central Bank has also many restrictions and in last decade they have become risk averse.
Now that is slowly changing with prices rising there is less risk for banks as values of housing assets become more valuable.
Over in Europe, they get cheaper loans and the Government move on long term rates might make the Irish banks offer more competitive loans, already that is beginning to happen.In the meantime there needs to be extra supply coming on stream and builders might also need some lending support so that they can build houses for sale.
We understand many builders have found this hard in the recent past, their reserves are depleted after the many lean years, so some type of housing finance agency assistance could help here too.
As they say thinking outside the box could help.
Ireland is a small country and can create flexible solutions as the situations demand.
The big challenge is getting more supply and using rapid planning processes , ease up on some of the over strict regulations for house building that is pushing up costs might alleviate more the current shortage and get more houses built so prices are keener and there is competition for customers.
We live in hope though because the system is slow and needs an overhaul.
Still the state mortgage plan is welcome and needs to be expanded.