asked the Minister for the Environment if he is satisfied with the operation of the Housing Finance Agency loan scheme and that borrowers under the scheme will not find themselves in serious financial trouble after a number of years; and if he will make a statement on the matter.

3.

asked the Minister for the Environment if he is satisfied that people are made fully aware of the long-term financial implications of the Housing Finance Agency loan scheme; and if he will make a statement on the operation of the loan scheme.

I propose to take Questions Nos. 2 and 3 together.

I am satisfied with the operations to date of the Housing Finance Agency loan scheme since loan repayments will continue to be income-related. I do not consider that borrowers under the scheme will find themselves in financial trouble after a number of years. Borrowers are fully aware that the relatively low repayments permitted under the scheme in the early years mean that the debt outstanding will be higher in later years than if the loan was being repaid in the conventional manner.

The agency has been successful in bringing private funds into housing and its loan scheme has been a significant contributor to the housing programme and the building industry in the present difficult times. The agency's scheme by its lower initial deposits and repayments has brought home ownership within the reach of persons who might not otherwise be able to provide their own houses. Since the first loans were advanced in September 1982 until 31 December 1983 about 3,650 loans valued about £71 million have been paid out.

If the people who have obtained such a loan continue to repay at the permitted lower level of 18 per cent of their income, is the Minister aware that they may well have an accumulation of debts which will remain against them and the particular house for ever and a day?

That is not quite true. The loan stretches over a period of 23 years, at which point it has been extinguished by repayments during that period.

Is the Minister aware that many local authority officials throughout the country who are dealing with Housing Finance Agency loans are gravely concerned about the difficulties which people will encounter in a matter of five, six or seven years?

I am not aware of these difficulties. However, given the interest shown by a number of people continuing to demand such loans, I am satisfied that the loan meets a particular need and that the disadvantages envisaged by the Deputy will not arise.

The Minister has mentioned a period of 23 years during which repayments would be made, which was the case when the loan was first initiated. Would he accept that in many cases on today's figures it would be up to 50 years before such a loan would be repaid and that it would not be the borrowers of the loan but their families who would find the mortgage still around their necks?

Undoubtedly, the period over which a loan is repaid is a long one. However, under any other loan system such as the SDA, a very long time elapses before a loan is cleared. In that case the same problem might arise, that the person originally taking out the loan might have died and repayment would then be the responsibility of the next of kin. There is no difference between one type of loan and another as regards what might happen in the distant future.

Of course, there is.

On what initial figures is the Minister basing the 23 year loan repayment period and on what rate of inflation?

I am basing it on the figure of £21,300 outstanding nominal rate, assuming an interest rate of 13.25 per cent. At the moment the interest rate is lower.