Fianna Fáil has claimed the Department of Housing was aware of concerns around the monitoring of the Rebuilding Ireland Home Loan but failed to act to rectify them.

The party says correspondence released under Freedom of Information suggests that the current issues with the loan, which it describes as de-facto suspended, could have been avoided.

Controversy arose earlier this year when ten local authorities reached their funding limit for the State-backed mortgage.

To apply for the loan, first-time buyers have to show they have been turned down for mortgage approval by two banks and earnings cannot exceed €50,000 for a single person or €75,000 for a couple.

The Department of Housing maintain that the scheme remains in full operation and local authorities have been advised to continue to review and process applications.

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However, borrowers in some areas have been told that approvals are on hold until further funding is allocated.

It has now emerged that in September 2018, officials in the Housing Finance Agency and the Department of Housing, were aware of a time lag in monitoring the loan between the relevant bodies administering the scheme.

Email correspondence observes how there was a delay between the issuing of mortgages by local authorities and the recoupment of funding from the HFA. The central fund was not being drawn down in line with borrowers being issued with loans.

Officials at departmental level concluded that the "take-up so far is low", despite it later emerging that the scheme was far more successful than originally anticipated.

Fianna Fáil housing spokesperson, Darragh O'Brien, said the system meant the department could not monitor the scheme properly.

"In July of last year there was €17.5m mortgages drawn down through the local authorities, but according to the Department and the Housing Finance Agency it was less than one million," he said.

Deputy O'Brien described the issue as sheer incompetence, adding, "it needs to be fixed once and for all".

"We need much better information, monitoring and basic forward planning to give buyers certainty into the future."

The Department of Housing said it has been closely monitoring the scheme since its launch and as soon as it became clear how successful it was, the Department "engaged with the departments of finance with regard to seeking additional funding for the scheme".

It added there was "always a time lag" between the issuing of loans by local authorities and the subsequent recovery of funding from the HFA. This was normal, and loans were reconciled in due course, the department said.

It said the Rebuilding Ireland Home Loan remains in full operation and applications are still being processed.

Last week it was reported that the Central Bank had no immediate concerns about the continuation of the loan.

The Government has said there would have to be consultation with the Central Bank to see if it was "comfortable" with more funding being provided to the scheme to keep up with demand.