asked the Minister for the Environment if he will make a statement on the future of the Housing Finance Agency.
Ceisteanna—Questions. Oral Answers. - Housing Finance Agency.
28.
The Housing Finance Agency has established itself as a major force on the housing scene and has enabled some 13,000 borrowers to house themselves during the past three and a half years. Many of these persons have either vacated local authority houses or would have sought such housing in the absence of the agency scheme. The agency has, therefore, played a valuable role in national housing policy. Loan approval and payments by the agency are continuing at a high level. The Housing Finance Agency (Amendment) Act, 1985, increased the agency's overall borrowing limit of £500 million which should be adequate to cover the agency's operations over the next three years or so without having to seek a further increase. As indicated by my predecessor in the course of the debate on that Act, the conditions prevailing in the financial market have resulted in the agency having to rely on short term borrowing in the absence of sufficient long term funding from sales of index-linked stock. The general question of the agency's funding arrangements is under consideration. The operation of the two publicly funded house purchase schemes — the agency scheme and the SDA scheme — are kept under continuing review to ensure that adequate mortgage facilities will continue to be available to intending home owners of modest means.
Is it not true that the key to the success of Housing Finance Agency was their ability to raise sufficient funds from institutional sources? Will the Minister agree that that has failed and that the agency depend on short term funding from the banks?
The conditions prevailing in the financial market in the recent past resulted in the agency having to rely on short term borrowing because of the absence of sufficient long term index linked stock. The entire question of the type of funding that might be available to the agency is under consideration.
I should like to remind the Minister of the debate that took place at the time the agency was established. On that occasion the Taoiseach made great play of what the agency would do but is it not true that the agency are totally at the mercy of financial institutions — as we said they would be — and have failed to raise the necessary funds? What action does the Minister propose to take to make up the shortfall this year?
As I have outlined the agency faced certain difficulties in raising suitable amounts of indexed linked stock. Part of the reason for that was the phenomenal success of the agency and the number of applications it was able to advance loans to. More than 13,000 families have purchased homes of their own through advances made to them by the Housing Finance Agency. That is at a level which is far higher than even the optimists on this side of the House estimated or the pessimists on the other side of the House indicated.
It is correct to point out that adequate funds are available to the agency to pay loans and service applications to it. I should like to indicate that in the first three months of this year the agency approved 1,135 loans and paid out 1,340 loans. I am a little disappointed at the general tenor of the Deputy's questions which, if misinterpreted, might wrongly give the impression to applicants of modest means that there might not be a continuing availability of money of this sort. Those applicants, otherwise, would have to apply for local authority housing which, in turn, would form a continuing burden on the taxpayer because of the level of subsidy for local authority houses. The successful operation of the scheme has allowed applicants of modest means to house themselves in a way which would not have been possible otherwise. It ill-behoves the Deputy to denigrate the scheme in the way he has done.
I do not need lectures from the Minister but I would like to answer him by saying that it is the responsibility of the Opposition to protect the less well-off in our community.
The Deputy should ask a question.
Is it true that it is of serious concern to the agency that there is a possibility of a withholding campaign because many of the owners have difficulty in disposing of their houses due to increased debts?
The possibility of the withholding of payments by whom?
By those who are unable to sell their homes because they are unemployed and the amount of the loan is increasing far in excess of the value of the house.
No. That is the first time I have heard that suggestion.
This issue is very important because it affects the less well-off in our community. Is the Minister satisfied that the agency are financially viable and that their auditors are prepared to stand over the figures of the agency without making further allowance for bad debts.
As I pointed out to the House the general question of the funding arrangements for the agency are under consideration. I also pointed out that the operation of the agency's scheme, and the SDA scheme, are kept under continuing review to ensure that adequate mortgage facilities will be made available. That review is taking place currently and I have every confidence that as a result of it it will be possible to continue to make loans available to people of modest means who would not otherwise be able to house themselves. I must confess that I am disappointed at the general impression the Deputy has sought to convey. The agency have had difficulties in that they have not been able to get access to sufficient amounts of index linked funding in the market in the recent past. I am referring to sufficient amounts to meet the level of demand from potential borrowers. That level is far higher than could have been estimated. As a result of that the agency have had to resort to short term borrowing.
Is short term borrowing dearer?
It is and that has caused some difficulties for the agency. Any borrowing institution like this will from time to time have difficulty with the type of borrowing it specialises in or has to resort to. It is up to the promoters of that institution, or in this case it is up to the Government, to take adequate steps to ensure that there is a continuing source and supply of mortgage finance available to people of modest means. It is the intention of the Government that that should continue to be the position. I would not like the discussion in the House to give rise to apprehension in the minds of people who may be applicants with the agency. That is why I took the trouble to point out that the agency in the first three months of this year paid out loans to 1,340 as well as approving 1,135 loans for new applicants. The agency are continuing to operate and it is wrong to raise fears or doubts in the minds of young people of modest incomes who are endeavouring to purchase their own homes.