BoI vows €1.5bn mortgage fund

BANK of Ireland (BoI) has pledged a further €1.5 billion in loan facilities for first time house buyers, but has refused to commit to a lowering in its mortgage interest rates.

The bank followed up Finance Minister, Michael Noonan’s generally positive news for beleaguered borrowers in Tuesday’s Budget speech, by yesterday announcing a new mortgage fund worth €1.5bn in support of customers looking to purchase their first home, or indeed moving home, next year.

BoI said the move builds on its plans to support customers wishing to buy a new home and is “reflective of the very significant role the bank is playing in the Irish mortgage market”.

“This fund is consistent with our business plans and will act as a further support to the Ministerial announcement in the Budget to support first time buyers in the market. Should we see demand outstripping the fund, then we will extend the size of the fund to cater for and support this demand.

“BoI is committed to supporting customers who wish to purchase a home and we will continue to take further steps to demonstrate this support,” the bank added in a statement.

Mr Noonan’s Budget proposals include an increase to 30% in mortgage interest relief for first time buyers, who purchased their homes between 2004 and 2008; while mention was also made of measures being drawn up to help those currently struggling to meet their mortgage payments.

Speaking at a post-Budget breakfast briefing, yesterday morning, BoI director of business banking, Mark Cunningham, said that less than one of every three home mortgages the bank is currently approving is being drawn down by customers.

He also noted that the Government’s home loan measures will “try and give the consumer teetering on the edge of buying property more confidence”.

A spokesperson for BoI later said the bank has, for some time, seen a muted demand for home loans and small business loans. They also pointed to recent Irish Mortgage Council data stating that BoI is providing credit to nearly six out of ten first time house buyers.

They added — in relation to the possibility of the European Central Bank (ECB) making another interest rate cut — its mortgage interest rates are “constantly under review”.

Additionally, yesterday, US investment firm — and BoI shareholder — Kennedy Wilson said it has completed the $1.8bn (€1.34bn) acquisition of BoI’s UK-based property loan book.

The transaction is thought to be the largest European real estate loan portfolio acquisition completed of late.