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Home Building Finance Ireland doubled loan approvals in 2021

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Home Building Finance Ireland doubled loan approvals in 2021

February 02
15:00 2022

The state agency established to fund delivery of new homes more than doubled loan approvals to €835m in 2021.

It was up 111% on the €395m approved by the end of 2020.

Home Building Finance Ireland’s latest performance update shows that funding had been approved for 3,729 homes in 71 developments in 18 counties by the end of last year.

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

HBFI was established to with a remit to provide funding at market rates for commercially viable residential developments.

It came about in response to the housing supply shortage that has seen supply falling well short of estimated demand.

While it is estimated that up to 35,000 units would need to be constructed each year to meet demand, the industry delivered around 20,000 units in each of the last two years – albeit against a challenging backdrop with lengthy lockdowns of sites, owing to Covid-19 restrictions.

Home Building Finance Ireland has now committed all of the €730m capital initially allocated to it when it started operations three years ago.

“HBFI will continue to have significant lending capacity available for future lending from recycling the proceeds from existing loan repayments,” the group said in a statement accompanying the report.

“It also has the ability to access additional capital through market-based borrowing if required.”

519 HBFI-funded units have been completed and sold, with a further 1,359 contracted for sale or sale agreed, the report shows.

Individual loan facilities range from €1m to €94m, with an average size of €12m.

The loan terms range from 12 months to 44 months, with an average of 21 months.

Units funded by HBFI range from one-bed apartments, accounting for 14% of units, to five-bed houses – making up 1%.

The majority are three bed (37%) and two bed (32%) units aimed at the first-time buyer market.

“2021 was a very strong year for HBFI. Our funding is on course to deliver thousands of new homes for owner-occupiers, renters and social housing and make a real difference to the supply challenge,” HBFI Chief Executive Dara Deering said.

“Although HBFI has only been in business for three years, we have already approved well in excess of our initial capital allocation of €730m. We are ready to add significant capacity to match demand if required,” she added.

Almost half of the homes approved for funding by HBFI are intended for the owner-occupier market while a further 30% will be available on the private rental market.

23% of units will be available for social housing with a further 4% accounted for by Part V housing, where 10% of developments must go towards social and affordable housing.

Of the €835m approved, drawdowns have taken place in respect of facilities totalling €474m covering 35 developments with 2,228 units where construction is in progress or has completed.

HBFI typically expects a time lag of between three and six months between a loan being approved and its first drawdown.

Source RTE

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