I wasn’t completely clear on the motives for the Government’s new Home Choice Loan scheme for first time buyers until I watched Prime Time last night.
There are at least 50,000 newly built houses lying empty in ghost estates across the country. Most of these houses will have been built by ‘Fianna Fail friendly’ developers who now find themselves unable to repay big bank loans – Time to call in some favours.
The new scheme will, in effect, transfer responsibility for repaying these loans from rich developers to poor taxpayers. This is obvious from the conditions laid down for applicants. Only new houses are included in the scheme. Applicants must be first time buyers who have been twice refused a mortgage from a bank or building society.
Effectively, the Government is creating its very own sub prime market by giving first time buyers, whose credit rating is so risky that regular lending agencies won’t touch them with a barge pole, up to 92% mortgages in a rapidly falling market. Inevitably, many will be unable to keep up payments and taxpayers will be forced to make good the losses.
Developers’ interests looked after, bankers’ interests looked after, taxpayer’s screwed.
It’s all clear now.