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A GOVERNMENT-BACKED scheme designed to make it easier for first-time buyers to get a mortgage has raised its interest rates in the past week in a move the opposition has described as “sneaky”.
The previous interest rate for a 25-year mortgage of 2% has risen to 2.745% and the rate for a 30-year mortgage has gone from 2.25% to 2.995%.
Where the funding for the scheme itself was under scrutiny last year, Labour’s housing spokesperson Jan O’Sullivan said this “cold harsh move” shows that Fine Gael has “[no] idea of the desperate housing reality that so many are facing”.
The government’s Rebuilding Ireland Home Loan scheme was launched in January 2018 with funding to the tune of €200 million over a three-year period to provide loans for first-time buyers.
The RIHL is a government-backed mortgage for first-time buyers which you can avail of through your local authority. The buyers can use the loan to purchase a new or second-hand property or use it for a self build.
Crucially, it can offer up to 90% of the market value of the property making it an attractive option for those looking to get a mortgage.
In frequent parliamentary answers, Minister Eoghan Murphy has said “the low rate of fixed interest associated with the [RIHL] provides first-time buyers with access to mortgage finance that they may not otherwise have been able to afford at a higher interest rate”.
TheJournal.ie has reported that the scheme was said to be in jeopardy last year, as the government had underestimated the demand for the scheme and the amount of funding it would need.
One prospective buyer TheJournal.ie spoke to pointed out how the rate rise would effectively mean a greater deposit is needed to guarantee the mortgage given the increase in the interest rates.
For example, using the loan calculator on the RIHL website, a 30-year-loan mortgage for a property worth €320,000 in Dublin for a single person earning €40,000 had an “indicative monthly repayment” of €765.
However, in the same situation with the rate increase, that figure is now €784.
The move also comes after Ulster Bank cut its interest rates in an announcement made just yesterday.
In a Labour statement describing the rate rise as “sneaky”, O’Sullivan said: “Neither home loan applicants nor local authorities were advised of a possible increase, and instead a circular was snuck through detailing that the increase would take effect immediately.”
The circular reads: “Rebuilding Ireland Home Loans – Funding and Scheme Update (14 Jan 2020) adds an increase of 0.745% contribution to the Mortgage Arrears Resolution Process Premium Fund (MARP) resulting in a rate increase from 2% for a 25 year on to 2.745% and from 2.25% for a 30 year loan to 2.995%.”
MARP is a requirement under Central Bank rules whereby lenders must operate a framework for dealing with borrowers in mortgage arrears or in pre-arrears.
According to the Central Bank, MARP procedures should incorporate communication with borrowers, financial information and a resolution to the issue of arrears.
O’Sullivan said she’d like to know “what the rationale is behind the move for almost quadrupling the contribution to this fund, and on what evidence it’s based”.
“This change makes no provision for individuals or families with applications already under consideration, and will no doubt exclude a significant cohort of people who just won’t be able to use the scheme,” she added.
At a press conference launching Fine Gael’s housing policy today, Minister Eoghan Murphy acknowledged the move would mean higher interest rates than those who’ve already secured the mortgages.
He said the mortgages were still “incredibly affordable”, the rate change would only affect new customers and that the “minimal” change was necessary on guidance from the Department of Public Expenditure and Reform.
In a statement to TheJournal.ie, a spokesperson for the Department of Housing said: “For new applicants, RIHL remains the most affordable mortgage on the market and the only one that is at a fixed rate for the entire duration of the loan and the only one which does not have to take account of the Central Bank’s loan to income ratios.
The revenue received from the change in interest rates is being ringfenced to the MARP premium fund (Mortgage Arrears Resolution Process), established by the Government in 2012 to support people who may get into repayment difficulties so they may remain in their home.
An independent review from the ESRI issued a number of recommendations for the future of the RIHL scheme. One of them was to increase the interest rate, and this was implemented earlier this week.
Jaysus, so irrational fears are not always that irrational :-(
@Kem Trayle: I know Jesus. I have few enough fears, but being in a car underwater is way up there, and collapsing motorway bridges is one of the scenarios in my head that puts me there.
@Rónán O’Suilleabháin: My wife hates going the Jack Lynch tunnel since I told her we’re under water.She always breaths a sigh of relief when we come out of it.
@Billy McNamara: she’s not the only one.
@Barbara Edwards: True, My Wife Panics when crossing the ha’penny bridge..( no joke ).
Drove over it yesterday….was supposed to drive over it on Thursday
@Mark Hayden: you wont be now.
@Mark Hayden: Your guardian angels were on the ball. What a nightmare..
@Mark Hayden: Lucky you Mark.
@Mark Hayden: buy a lottery ticket. ..you’re having a lucky week
@Mark Hayden: drove over it 3 weeks ago. That’s truly frightening.
@Mark Hayden: your post has given me the shivers!
@Mark Hayden: Holy shi#e.Really? Don’t forget to do the lotto tomorrow.But maybe you have already had your win.RIP to the poor people who have no luck.
@Mjhint: you guys probably spent 5 seconds driving over that section of the bridge. The odds of it collapsing surfing the 5 seconds you were on it is almost negligible
@Peter: tell that to the 30 who died
Poor souls, that’s just tragic, doubtful nobody perished. RIP.
12pm in Italy is not 10am GMT, can’t even report the basics correctly……
@Fat Face 99: Actually, 12pm in Italy is currently the same as 10am GMT. GMT is Winter time. Currently, we are in IST (Ireland) or BST (UK) which is the same as GMT+1. Italy is 1 hour ahead of our timezone (CEST) which, at the moment, is set at GMT+2, but will revert to GMT+1 in October.
@Fat Face 99: I presume they mean 12 noon (which is neither pm nor am). This would be 1000 GMT, or UTC. Right??
@Fat Face 99:
1) you’re wrong
2) A breaking news article about a tragedy is not the time or place for commentary on minutiae
@Fat Face 99:
@Fat Face 99: Are you for yeal.Do you know people have died in this terrible incident?And all that’s worring you is the time.For fu#k sake what kind of a human are you?
@Tom Sheridan: Your’e just as bad as the as the arsehole you’re answering.
@Fat Face 99: you are wrong, and a tiresome, boring malcontent.
@Brian Ó Dálaigh: Maith leat Brian
Big tragedy, close to my country in this hard time ❤️
Terrible tragic disaster… really sad.
Eye witness said the bridge was stuck by a big bolt of lightning and then collapsed.
Maybe never check bridge from inspection. Scary collapse and hope all alive from vehicles fall
@Brian Flavin: very hard to detect fatigue, but should have reinforcement program after the first twenty or thirty years just in case. Thoughts are with all those families.
@Greg Blake: They did. It was restructured in 2016.
@Greg Blake: it isn’t that hard to detect fatigue if you use the correct non-destructive testing (NDT) techniques. Plenty of standards available showcasing methods to assess structural integrity including structures with existing defects. The real question is whether or not they were conducted in this case.
@Alison O’ Connor: not necessarily Alison, sometimes the micro cracks are so fine as to be intergranular and large sweep radiography fails to pick them up. It wasnt even recognised as a problem until the postwar period and many mysterious aircraft failures occurred. So they introduced life cycles for aircraft structural components as NDT was insufficient. Thats improved a lot since but still unreliable for minature stress induced flaws. I just read above that there was reinforcenent work done, but if not designed and carried out correctly that can stiffen the structure and accellerate micro cracking.
@Greg Blake: Reinforced concrete is not an elastic or homogenous material. Microcracking is inevitable and expected.
Most older bridges have not been designed with modern traffic volumes and weights in mind. Strengthening rather than replacing to uprate to modern loads is not unusual. All of little comfort to the victims involved.
@Greg Blake: argee your comment & sadly for family love one gone.pray all victims
Jesus that’s frightening,hopefully there’s a good outcome for families involved but highly unlikely from reading the report.
Rip
Awful.
Could happen here
@WreckDefier: No it couldn’t – we have Mr Ross in charge of transport!
May they rest in peace,amen
Rip to all the people but what’s the story with building standards in Italy???
@pg38: really? What do you mean what’s up with them?
…
If it was a lightning strike then no matter how structurally sound a bridge or any building is could withstand a high power lightning bolt.Global wether this year has been extreme and this unfortunate event may be as a result of this
Infrastructure needs looking at
have your say