Government fund for delivering new homes grows loan approvals to €1.25bn

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Caoimhe Gordon

Home Building Finance Ireland (HBFI), which was set up by the Government to fund the delivery of new homes, grew its loan approvals to €1.248bn last year.

Now in its fourth year, total loan approvals in 2022 were 49pc more than the €835m reported last year.

However, the fund warned that levels of applications and new approvals were lower in the second half of 2022 due to “a slowdown in construction activity.”

HBFI was first launched in 2019 to provide loans to building firms lacking the equity needed to get loans from banks or other private sector lenders.

It is funded by taxpayers via the Ireland Strategic Investment Fund.

In 2022, HBFI reported that it approved funding for 5,717 new homes in 99 developments across 18 counties.

Social housing projects accounted for a quarter of the new homes approved for funding.

This marks an increase from the prior year. In 2021, HBFI approved funding for 3,729 new homes in 71 developments located in 18 counties.

Since the fund’s inception, 1,245 units funded by HBFI have already been sold, with a further 1,819 contracted for sale or at the sale agreed stage by the end of last year.

A total of 70pc funded by HBFI are two or three bed units which are aimed at the first-time buyer market.

Of the €1.248bn approved at year end, drawdowns have taken place in respect of facilities totalling €909m for 60 developments which include 4,132 units where construction is in progress or has completed.

HBFI said the time lag between loan approval and first drawdown is typically between three and six months.

“We’re lending to large and small housebuilding firms, extending our reach to improve supply as much as we can,” HBFI chief executive Dara Deering said.

“The first half of 2022 was our busiest-ever six-month period in terms of loan approval, while we saw a lower level of applications and new approvals in the second half reflecting a slowdown in construction activity across the market, feedback from housebuilders indicates that demand for new funding is resilient despite the challenges of construction price inflation and higher interest rates.”

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