Business

Loan approvals at State-backed lender for builders jump by a third

Home Building Finance Ireland opened for business in January 2019 with an initial war chest of €750m

Home Building Finance Ireland chief executive Dara Deering and Minister for Finance Michael McGrath. Photograph: Grainne Ni Aodha/PA Wire

Colin Gleeson
Wed Jan 31 2024 - 00:01

Home Building Finance Ireland (HBFI), which was set up by the Government to fund new homes, grew its total loan approvals year-on-year by a third to €1.66 billion at the end of December.

The State-backed lender for builders opened for business in January 2019 with an initial war chest of €750 million from the Ireland Strategic Investment Fund to fund up to 7,500 new homes over five years. It can also raise additional funds on the market.

HBFI, in a performance update for last year, said demand for funding “remained strong” throughout 2023, with total new loan approvals of €408 million over the course of the year. It described its pipeline of potential new developments as “positive” moving into 2024.

At the end of December, HBFI had approved funding for 8,495 new homes in 129 developments across 22 counties. That is about a thousand more than its five-year target set by the Government at its inception.

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It said it is now in a position where it recycles capital from completed developments to new developments, ensuring it has sufficient funding available.

Some 2,837 HBFI-funded units have already been sold, with a further 1,501 contracted for sale or sale agreed as of the end of December.

Of the €1.66 billion approved, about €1.2 billion has been drawn down, for 86 developments supporting 6,499 homes where construction is in progress or has been completed.

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

Individual loan facilities range from €1 million to €108 million, with an average size of €13 million. These facilities are for an average term of 22 months.

HBFI chief executive Dara Deering said the group has funded “significant quantities” of new homes for owner-occupiers, renters and people who need social or affordable housing.

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“Over our five years in business, we’ve evolved to quickly address emerging gaps in the funding market,” she said.

“We’ve also rolled out tailored, flexible and competitive products to suit small, medium and large housebuilders and we can now fund developments of any size from five units upwards.

Minister for Finance Michael McGrath said HBFI has responded to emerging funding gaps in the market and “plays an important role in the Government’s strategy to increase the supply of new homes of all tenure types, across all areas of the country”.

“The Government remains committed to driving the development of new homes and to supporting homebuilders in accessing the finance they need. We will continue to support the team at HBFI as it further builds upon the positive impact it has had in the market over the past five years.”

Colin Gleeson

Colin Gleeson

Colin Gleeson is an Irish Times reporter

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