The Government is controversially trying to involve the banks in its shared equity housing scheme, it has emerged.
It is understood that the nation's banks would match the Government's €75m initial funding of the scheme.
However, discussions are said to be stalled due to a request from banks that the interest on the Government's equity be more aligned to the mortgage market and not as low as 1.5%, as wished for by the Department of Housing.
A Department of Finance spokesperson confirmed that it is liaising with the Department of Housing on the matter. It is understood its banking department is engaged with banks on the issue.
Housing minister Darragh O'Brien has said the scheme will not be "a double mortgage" when it launches later this year.
A Department of Housing spokesperson said final details of the scheme "are being negotiated with stakeholders".
They said: "When complete, the scheme will be in accordance with Central Bank rules including any potential private investment. It has always been the case that there would be no requirement to pay off the equity stake [until the house was sold] and based on the UK example, that the borrower will pay equity loan fees, but not for the first 5 years. In the sixth year, they would be charged a fee that will increase over the years.”
Sinn Féin Housing spokesperson Eoin Ó Broin said: "The banks are now demanding a higher entry-level interest rate of up to 3% with periodic increases leading to a final interest rate of up to 6% in year 25.
"Worse still, the banks' demand for a rising interest rate would mean borrowers' mortgage payments would increase significantly over time."
A similar interest change was in place with the last shared ownership scheme run from 2003 to 2010, but an independent review of this scheme conducted under then junior minister Jan O'Sullivan was highly critical of the practice.
The Banking Payments Federation of Ireland confirmed banks are engaging with the Government on the shared equity scheme.