Credit unions and non-bank lenders are keen to get involved in the government’s new home sharing scheme after being banned from rolling it out this week.
Sources from the Ortgage market shared this Irish Independent that new entrants were queuing to join First Home, which will offer home financing in exchange for an ownership stake after its opening phase, once certain operational issues have been ironed out.
“It was always intended that the banks would come in first,” a source said. “The non-banks will come on board in about six months.”
It is understood that non-bank lenders such as Finance Ireland, Avant Money and Dilosk/ICS are looking for changes in eligibility requirements that would bring comfort to the big lenders who fund their loans.
Sources said there were concerns over who would have priority in the event of a loan default and redemption.
The three main participants – AIB, Bank of Ireland and Permanent TSB – came on board earlier in the year following government pressure, as Housing Secretary Darragh O’Brien was determined to meet a July deadline to launch the initiative, as detailed under Housing for all plan.
The major banks have collectively pledged €200 million to First Home to match funding from the Housing Department and formed a new independent government agency to be led by newly appointed CEO Michael Broderick.
Sources said the non-bank lenders were invited later, but not in time to attend the program’s launch, which took place on Thursday.
A source said a political decision had been made to launch by a specific date and that lenders needed to be on site as soon as possible, but those who were left out of the rollout were not excluded from the scheme.
This gives the participating banks a first-mover advantage in the competitive first-time buyer market. However, because First Home is limited to borrowers from participating lenders, it means anyone with a home loan from a non-bank or credit union is excluded from the new system.
Under the plan, First Home will help 2,000 shoppers annually bridge the gap between their deposit and their mortgage, meaning the banks will have first place in that segment of the market.
The program offers financing of up to 20% of a home’s value within certain price limits. In return, First Home earns an equal interest in the home, which can be paid off over time.
The hope is that builders will begin to build according to the program’s specifications and thus create living space in the “missing middle”.
A similar program in the UK increased home supply in the target segment by 14 percent.
It is believed that credit unions and non-bank lenders, which together have a market share of about 10 percent, could be brought into the system with a lower capital requirement than banks.
The scheme is managed by Australian credit services firm Link through its local subsidiary BCM Capital, which won the deal late last year.
https://www.independent.ie/business/irish/lenders-want-comfort-on-security-before-joining-first-home-scheme-41825977.html Lenders want security-related comfort before joining the First Home program