‘Get your housing in order’, says Sinn Fein’s housing rep

by Gazette Reporter

Government attempts to involve the banks in its shared equity housing scheme will put borrowers at greater risk, Sinn Fein’s housing spokesman has warned.

Dublin Mid-West TD Eoin O Broin says any direct bank involvement in the Shared Equity Loan Scheme breaches Central Bank lending rules.

It is understood that the banks would match the Government’s initial e75m funding of the scheme aimed in the main at first time buyers.

Deputy O Broin revealed ongoing negotiations between the Department of Finance and the Banking and Payments Federation over the banks’ role in the controversial Shared Equity Loan Scheme.

He said: “The talks have stalled due to a disagreement on how much interest should be charged on the shared equity loan. Initially the banks had indicated a willingness to agree to a fixed interest rate of 1.5% with repayments starting after five years.

“However, the banks are now demanding a higher entry level interest rate of up to 3% with periodic increases leading to a final interest rate of up to 6% in year 25.”

The Department of Finance confirmed that it is liaising with the Department of Housing on the issue. Housing Minister Darragh O’Brien has rejected claims that it will be “a double mortgage” when it’s introduced later this year.

Deputy O Broin warned: “The direct involvement of the banks in the shared equity loan scheme is a clear breach of the Central Bank’s lending rules – that bank finance and staff would be involved in providing secondary loans on top of a mortgage 3.5 times the borrowers gross income is a breach of those rules.

“Worse still, the banks demand for a rising interest rate would mean borrowers mortgage payments would increase significantly over time. An independent review conducted by Minister of State for Housing Jan O’Sullivan in 2013 was highly critical of this increasing charge.

“It was one of a number of factors that led to mortgage distress rates among those in the shared ownership scheme being four times higher than those with standard mortgages.

“Saddling working people with every greater levels of debt and rising monthly mortgage payments to buy overpriced homes in not an affordable housing scheme.”

Deputy O Broin called for the shared equity scheme in its current format to be scrapped with a focus shift to direct delivery of affordable homes “to rent and buy at prices that working people can actually afford”.

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