What Role Does the Government Play in Mortgage and Housing in Ireland?

In every country worldwide, government involvement in housing and mortgage is vital as they control and monitor housing projects and interest rates that come with mortgage finances. In Ireland, the government has not been left out; they have been involved in all areas pertaining to housing and mortgages. This includes: –

  • Giving oversight of the housing and mortgage sector. The Irish government has been involved in real estate is regulating the interest rates and mortgages. As banks try to make money, the Irish government oversees the mortgages and housing finances, and this helps Irish citizens not to be exploited by both the brokers and lenders.
  • It provides grants and loans. The Irish government offers incentives and grants in times of economic collapse, which has proven vital in helping to control the housing sector in Ireland. For instance, in the 1990s, when there was a financial bubble in Ireland, the government put commitment to expanding home ownership to encourage people to buy houses.
  • Creating policies. The government’s involvement in the domestic mortgage market can take many forms. This includes social housing policies for first-time, low-income homebuyers, government-owned financial institutions, and financial institutions that provide credit or liquidity to mortgages.
  • Providing subsidies and incentives. The government offers subsidies to certain groups such as first-time buyers, specific groups (low-income), and other buyers in the form of savings or preferential charges.
  • Reduced taxation. The government involvement has been seen through the provision of low interest on a mortgage by lowering tax deductive and capital gains tax deductibility.
  • Provision of mortgage schemes. The government assists buyers by providing cheap and easy to access mortgages. The drawback with these schemes is that the loans are limited to buying houses only. Moreover, government-backed mortgages do provide not only control but also a long-term financing process.
  • Providing rules and regulations. The government is involved in mortgage and housing by making rules and reforms that assist in mortgages and cheap accommodation in Ireland. For instance, the Irish government did introduce legislation to reform the bankruptcy system. It has stated that it intends to revisit a loophole in Irish repossession legislation that has limited banks’ ability to own property. Indeed, Ireland’s current repossession rate
  • For house purchases, the government allows early withdrawals from provident funds

In general, government involvement in housing finance has facilitated affordable housing and thus increases the number of people who own homes. Moreover, the presence of a dominant state institution in domestic mortgage markets has been influential. This has reduced the range of mortgage instruments available, reduced financial sector competition, and influenced savings incentives for potential home buyers. As a result, the overall impact of government assistance in the housing sector has seen various phases of the housing market cycle in Ireland.

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