Local Authority Residential Mortgage Credit: A Source of Non-Market Sub-Prime Homeloans for Low-Income households

Irish Journal of Applied Social Studies. 2008;8(1):51-69


Journal Homepage

Journal Title: Irish Journal of Applied Social Studies

ISSN: 1393-7022 (Print); 2009-8642 (Online)

Publisher: Social Care Ireland

LCC Subject Category: Social Sciences: Social pathology. Social and public welfare. Criminology | Social Sciences: Social history and conditions. Social problems. Social reform

Country of publisher: Ireland

Language of fulltext: English

Full-text formats available: PDF



Dermot Coates


Blind peer review

Editorial Board

Instructions for authors

Time From Submission to Publication: 26 weeks


Abstract | Full Text

As the volume of mortgage credit has risen in tandem with house price inflation, the sub-prime homeloan sector of this market has begun to expand in order to meet demand from those not serviced by the mainstream financial service providers. This article examines the role of local authorities in providing residential mortgages and assesses whether those who have traditionally borrowed from non-market (or public sector) lenders would be considered to be sub-prime borrowers by the private sector. It concludes that, in view of the relatively low average incomes of this cohort of borrowers, they represent a higher probability of homeloan default and as a consequence, would be subject to a higher cost of credit in the private sector. However, this paper highlights the favourable terms offered by local authorities and argues that their failure to price according to the risk profile of borrowers exposes the Exchequer to higher – and often unquantified – costs in pursuit of promoting home-ownership.