Low cost retrofit loans delayed until autumn

A new low-cost loan scheme for home retrofits has been delayed until as late as October but Coalition sources have insisted the scheme is “progressing well” and final details will be agreed in the coming weeks.

The Government originally promised the scheme would be in place during the summer of 2022 but talks with stakeholders, such as the European Investment Bank and Strategic Banking Corporation of Ireland, have been more drawn out than had been expected.

A spokeswoman for the Department of Environment said: “It is expected that the loan guarantee will be in place in quarter three of this year.” A Coalition source confirmed a date of either September or October.

The exact interest rate that will be offered to homeowners is still being worked out and will emerge in the coming weeks after a final round of market engagement with lenders but the Government is aiming to offer a package significantly below the market rate.

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The new scheme, due to be launched by Minister for Environment Eamon Ryan, will allow credit institutions to offer loans of up to €50,000 with reduced interest rates to private homeowners and non-corporate landlords. The hope is that this will make home energy upgrades more affordable for householders and bolster the State’s efforts to achieve its binding climate goals.

The Department of Environment and the Strategic Banking Corporation of Ireland are understood to be close to signing documents with the European Investment Bank and the European Investment Fund.

The State will then be in a position to guarantee a portion of the money that banks lend to borrowers to carry out retrofitting works in their homes. The guarantee will protect banks from possible losses on non-performing loans and, in turn, allow them to offer lower interest rates.

A final round of market engagement will be held with lenders as soon as the documents are signed and, at this point, the final interest rates on offer will be determined.

A spokeswoman for the Department of Environment said they are “working with the Department of Finance, the Strategic Banking Corporation of Ireland, the European Investment Bank and the European Investment Fund to develop a low cost residential retrofit loan guarantee scheme”.

[ Painfully slow progress means plan to retrofit 500,000 homes needs a rethink ]

She said: “Significant progress has been made to date, with two open calls for expressions of interest to participate in the scheme completed and a number of banks and credit unions submitting formal expressions of interest to provide loans under the scheme. The development of this innovative scheme is a complex process and there has been extensive due diligence between the EIB Group and the Irish banking and credit union sector. It is expected that the loan guarantee will be in place in quarter three of this year.”

The roll-out of the loan scheme is a key plank of the Government’s Climate Action Plan.

Some €356 million in funding has been allocated to the Sustainable Energy Authority of Ireland to support the delivery of 37,000 residential and community retrofits for 2023.

The Government has set a target of 500,000 retrofits by the end of the decade. Figures for last year show the number of homes upgraded to a B2 Berwas 8,481. The Government is hoping to further encourage households to take out a lower-cost State backed loan by arguing that given recent increases in fuel prices, the lower interest rates will mean loan repayments will be almost covered by the savings made on heating bills.

Furthermore, people who carry out retrofitting works may qualify for lower mortgage rates if their final Ber is between A1 and B3.

The low-cost loans will be available alongside the current grants for energy upgrades. It was originally thought the interest rate for the loans would be about 3.5 per cent but it is not yet known how recent interest rises will impact this.