Shared equity housing scheme: Government tries to involve banks as they would match €75m initial funding of the scheme

DUBLIN: The Government is trying to include Irish banks in its shared equity housing scheme. The involvement of banks in the government scheme has been confirmed by the Banking Payments Federation of Ireland.

Banks in Ireland are expected to match the Government’s €75 million initial funding of the shared equity housing scheme.

However, further discussions are ongoing on this matter as the negotiations halted after the banks requested that government interest on the housing scheme be further aligned with the mortgage market and not less than 1.5%.

At the same time, the housing department made it clear that their plan would comply with central bank lending rules and that homeowners would not be required to repay equity shares taken by the government.

The spokesperson for the Department of Finance confirmed that the Department is in touch with the Department of Housing in this regard. Meanwhile, a spokesperson for the Housing Department said that the final details of the scheme will be discussed with stakeholders.

However, Housing Minister Darag O’Brien has confirmed that the scheme will not be “a double mortgage” when it starts later this year.

Sinn Féin Housing spokesperson Eoin Ó Broin said that the direct involvement of banks in the shared equity loan scheme is a clear violation of the macro prudential lending rules of the central banks. “Worse still, the banks’ demand for a rising interest rate would mean borrowers’ mortgage payments would increase significantly over time,” he added.

A similar interest change was made with the last share ownership scheme from 2003 to 2010. But an independent review of the project under then-Junior Minister John O’Sullivan sharply criticized the practice.