Call to reform Home Choice Loan scheme

THE Government must abandon or reform the €500 million Home Choice Loan scheme as it is unrealistic, according to brokers.

The Professional Insurance Brokers Association (PIBA) said the controversial scheme which aims to help first-time buyers purchase a house has had “less than a handful of successful applicants”.

The Home Choice Loan scheme came into effect on January 1, 2009, but has been heavily criticised as being a bail-out for builders and a programme of subprime mortgages.

Complaints submitted to the European Commission allege the plan is contrary to competition rules as it only applies to new homes, and is only open to people earning more than €40,000 a year.

Director of PIBA mortgage services, Rachel Doyle said a basic requirement for the scheme is that the prospective borrower must have already been declined by two separate lenders but added that the terms applying to the Home Choice Loan are fairly similar to those applying in the wider market.

“So it is well nigh impossible for most people to succeed, as evidenced by its lack of take-up since it was introduced over a year ago. Altering the scheme to include second-hand houses as well as new builds will have no effect on take-up since that is not the issue,” she said.

The PIBA said it would also question the rationale for such a scheme in the first place.

“The Home Choice Loan scheme should either start lending or fold up tent and put the taxpayers’ money to better use – rather than keeping this scheme open for aesthetics.

“We would urge the Government to act urgently on this. There is much greater affordability in the market now. First-time buyers getting into the market now could avail of good long-term fixed interest rates that are unlikely to remain at current levels in the short to medium term,” said Ms Doyle.