Bank of Ireland first financial institution to offer mortgages to Affordable Housing market

Bank of Ireland Mortgages today (Thursday 18 November 2004) announced that it is launching a new mortgage offering for the affordable housing market to assist those who wish to purchase properties under the various affordable housing schemes. Called Breakthrough, the mortgage offer, the first of its kind in the country, will offer qualifying customers loans of up to 97% of the purchase price of their property at any of the Bank's standard new business rates. Mortgage terms of up to 35 years will be offered to qualifying customers. The Bank will make the mortgage offering available to affordable housing applicants where the Local Authority and the Bank have agreed to share the security. All the normal standard lending criteria will apply.

Qualifying customers will only have to provide a 3% deposit on their house rather than the traditional 8% normally required from first time buyers. Interest repayment rates will be the same as those applying to new business customers and will include a choice of tracker, variable or fixed rate options. The Bank's current interest rates range from 2.49% to 3.6%. The mortgage offering will be available as early as possible in the New Year.

Commenting Des Crowley, Chief Executive Officer, Retail Financial Services, Bank of Ireland said: "By taking a flexible and imaginative approach to our own security and lending requirements, we have developed, in consultation with the Department of the Environment, Heritage and Local Government, an innovative solution which I hope will have a real impact for those who have not been able to afford a home in today's market. It is anticipated that 11,000 affordable homes are due to become available to purchasers over the next two to three years. As the first financial institution in Ireland to enter this market, I am confident that our mortgage offering will make home ownership a reality for many who may not have thought it possible".

The announcement was welcomed by An Taoiseach, Mr Bertie Ahern, TD, as a valuable complement to the existing wide range of Government schemes to assist people with their housing needs. He stated that improving access to affordable housing is a very important objective of Government policy and that the positive engagement from the financial sector was a further example of how working together in partnership can bring benefits to everyone in society.

It will now be possible for purchasers to borrow more than the maximum Local Authority loan limit of Euro165,000. With the Bank of Ireland Mortgages Breakthrough offering, there is no limit to the loan size subject to repayment capacity. Sole borrowers can borrow up to four and five times their income and joint borrowers can borrow up to four and a half times their income. Bank of Ireland Mortgages will have the first charge on any property on which it lends for the principal advanced and interest, while the relevant local authority will have a second charge. The maximum loan to value will be 85% or lower, depending on the level of discount.

All applicants must have been approved by their local authority for a property in advance of their mortgage application. Proof of property allocation will become part of the Bank's qualifying criteria, as will other standard terms such as mortgage protection and home insurance.

Access to affordable housing is provided by way of a number of schemes, including the 1999 Affordable Housing Scheme, Part V Affordable Housing Scheme and Affordable Housing Initiative under Sustaining Progress.

Initially, Breakthrough mortgages will be available through the Bank of Ireland branch network. However, it may in due course become available through its sister-subsidiary, ICS Building Society, which is also a major player in the mortgage market.

Ends

For further details contact:
Anne Mathews
Media Relations Manager,
Group Corporate Communications
01 604 3836 or 087 246 0358

Olive Moran,
Marketing Manager
Bank of Ireland Mortgages
01 611 3525 or 086 6622333

Note to Editors

The 1999 Affordable Housing Scheme provides for the building of new houses on Local Authority land or the Local Authority engages a developer to build the properties. The Local Authority then becomes the owner of the property and sells it on to eligible first time purchasers at a discount from the market value.

The Part V Affordable Housing Scheme provides for the release of a certain percentage of a housing development for the purpose of social and affordable housing. The Local Authority can sell the dwelling to an eligible affordable housing applicant. The land/site is made available to the Local Authority at the existing use value rather than the development value and therefore can be sold at a significant discount from the open market value.

The Affordable Housing Initiative under Sustaining Progress provides for the release of Local Authority or State lands for the purpose of affordable housing. All mortgages for these properties must be provided for by the private sector. These are usually project-based developments based in high-density areas such as Dublin City and County, Cork City and County.