Housing Minister Darragh O’Brien has said a rise in interest rates will not affect the targets for the delivery of social housing.
His comments came after The Irish Times revealed that the State Housing Financing Agency (HFA) plans to raise their lending rates, raising concerns that social housing targets could be missed due to a rise in interest rates.
Mr O’Brien said on Saturday that approved housing authorities will be able to proceed with current plans and that no planned social housing, affordable housing or cost rent will be compromised.
The HFA told approved housing agencies last week that interest rates on their long-term fixed loans will rise.
The agency’s 25-year fixed rate is up half a point to 2.25 percent, while the 30-year fixed rate is up a quarter point to 2.5 percent.
Not-for-profit housing associations rely on these credits to finance housing construction. These agencies are responsible for providing 45 percent of the new social housing provided for in the government’s housing plan for all.
Mr O’Brien told RTÉ that higher interest rates will not affect future deliveries, and the government was willing to explore the need for additional financing to complete the projects.
The minister said: “I want to assure the approved housing sector that we are working to re-evaluate any future proposals that are out there.”
He said the government’s plan to provide about 10,000 new social housing units each year until 2030 remains on track.
“The approved housing authorities are very important for that….we will rework and reassess any future proposals that they believe could be affected by this rate increase. We’re going to tackle it.”
He said HFA interest rates still represented a good deal for the treasury.
Mr O’Brien said any additional funding needed will come from his department, possibly from Housing For All’s budget, which includes multi-year funding of more than €4 billion a year.
“We have flexibility in that… because we have a multi-year plan that is fully funded, it gives us the flexibility on the capital side to be able to work through these changes as they go along,” the minister said.
He acknowledged that the plan was designed when inflation was much lower.
The minister added that the HFA manages their financial structures and sets interest rates independently of the government.
Earlier, HFA chief executive Barry O’Leary said the “modest” gains were the result of “high volatility in bond markets” — where the agency gets its funding — and the “significant” rise in government borrowing costs.