The potential impact of a €650 million increase in the Housing Finance Agency borrowing for the Rebuilding Ireland home loan scheme
To ask the Minister for Housing; Planning and Local Government the potential impact of a €650 million increase in the Housing Finance Agency borrowing for the Rebuilding Ireland home loan scheme on the general Government debt, general Government balance and calculations of available financial resource fiscal space under EU and national rules; and if he will make a statement on the matter.
Initially, funding of up to €200 million for the Rebuilding Ireland Home Loan was raised by the Housing Finance Agency (HFA) from a variety of sources, on a fixed rate basis for periods out to thirty years maturity. Based on the pricing achieved, local authorities could offer a first tranche of fixed-rate annuity finance to eligible borrowers at rates of 2.0% and 2.25% per annum, for twenty five and thirty years respectively, up to an aggregate maximum of €200 million. Subsequently, owing to the success of the scheme, sanction was given for further RIHL lending of €363 million. This brings total available funding for the scheme to €563 million for the period 2018-2019.
This funding is not allocated to individual local authorities but rather will be drawn down by local authorities from the HFA to match their lending under the Rebuilding Ireland Home Loan. Local authority borrowing from the HFA that is loaned by local authorities to individuals, as long as it is provided on a commercial basis, is classified as a financial transaction, and so does not count as General Government Expenditure nor impact on the general government balance.
The HFA is an on-balance sheet entity and therefore its debt to the non-government sector counts towards general government debt. The effect on the general government debt is determined by the extent to which borrowing by the HFA to fund the scheme requires additional borrowing by the NTMA.
Queries regarding the effect of the RIHL on available fiscal space under EU and national rules is a matter for my colleague the Minister of Finance.
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