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HBFI trebles loan approvals to €340m in six months to July 2020

Home Building Finance Ireland (HBFI), set up by the Government to fund the delivery of new homes, has trebled its loan approvals from €114m to €340m in the six months to July 2020 (an increase of 198%).

In a performance update published today, HBFI said that at the end of July it had approved funding for 1,477 new homes in 29 developments in 16 counties. Social housing projects account for 34% of the new homes approved for funding.

Post-Covid Momentum Fund

  • The key driver of the increase in lending approvals was HBFI’s new €200m Momentum Fund, which was launched in May to address a potential gap in the market arising from the Covid pandemic.
  • This “step-in” fund was set up specifically to help housebuilders commence large housing developments in prime locations in cases where funding may not have been available.
  • In the three months between launch in May and the end of July 92% of the Momentum Fund (€184m) was committed.
  • In response to the strength of demand for the Momentum Fund, HBFI is announcing today that it is adding an additional €100m to this fund. 

HBFI Progress Update

Today’s progress update shows that, at end July 2020, HBFI’s key metrics compared to its previous progress update in January 2020 were as follows:

  End July 2020 End January 2020
Loan approvals €340m €114m
Number of units supported 1,477 616
Number of approved developments 29 18
Average facility size €12m €6m
Average development size 51 units 34 units

HBFI Chief Executive Dara Deering said:

HBFI was set up to improve the supply of new homes – for buyers, renters and people who need social housing.

We have a lot more to do but we have continued our strong progress during 2020 and are now committed to funding almost 1,500 new homes in 29 developments in 16 counties.

Housebuilders have experienced unprecedented challenges since the onset of Covid disruption and we moved quickly to establish a range of effective supports to ensure continuity in the supply of new homes.  We will continue to engage with the sector to bring forward additional solutions to support housebuilding in due course.

Our €200m Momentum Fund has been particularly well received and was close to being fully committed within just three months of launch. We are delighted to announce that we are increasing this fund by an additional €100m today.”

The Minister for Finance, Paschal Donohoe TD, said:

Based on the figures released by HBFI today, it is evident that interest in their Momentum Fund product has been very strong since its launch, with over 90% of the fund already committed. Absent the availability of this funding, it was likely that the commencement of construction on these sites would have been delayed, resulting in delays in the delivery of new homes. While traditional lenders continue to navigate their way through the impacts of Covid-19, I feel it is an appropriate step by HBFI to increase their Momentum Fund by a further €100 million at this time to ensure funding is available for these housing schemes over the coming months.”

Measures announced in 2020 by HBFI to improve housing supply

Earlier this year HBFI announced a number of initiatives to extend its support for housebuilders:

  • The €200m Momentum Fund for large developments in prime locations  
  • Extending HBFI’s existing offering to include more large-scale housebuilding firms, by doubling the upper limit for individual HBFI loans from €35m to €75m
  • Extending HBFI’s existing offering to include smaller housebuilding SMEs, reducing the previous minimum size requirement of 10 units to 5 units 
  • Agreeing to back major apartment developments for the first time