The Central Bank has said it has no immediate concerns about the continuation of a State-backed loan scheme for first-time buyers.
An internal document from the Department of Public Expenditure and Reform, released to RTÉ's Morning Ireland under Freedom of Information last month, revealed the scheme has been put on hold because it has run out of funding.
The Government said at the time that 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.
The Central Bank was asked to assess a number of issues including the potential impact on the property market and the implications for the public finances from an expansion of the scheme which offers loans to people who have been turned down by banks or building societies.
The Central Bank has carried out a "preliminary assessment" which was discussed at its Financial Stability Group on 22 March.
RTÉ News has learned that the Central Bank Governor Philip Lane said the assessment concluded that given the scale and scope of the loan scheme "it is not immediately apparent that material financial stability concerns arise across borrower resilience, credit risk and the financing of the scheme."
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Details of the assessment, contained in a letter to Fianna Fáil's Finance spokesperson Michael McGrath, said the number of loans offered under the scheme last year was equivalent to 3% of first-time buyer loans issued by regulated lenders.
Mr Lane said while lending under the scheme is added to the national debt, at €200m it amounts to 0.001% of that debt.
"It would take a substantial increase in the magnitude of financing provided to have any sort of notable impact on the debt ratio."
Mr Lane added that those who borrow under the scheme are likely to have a higher credit risk than those financed through banks and that any lending outside the limits considered prudent could "pose challenges for those borrowers in case of future distress".
Therefore any change to the scheme that would involve more than 20% of lending being above the 3.5 loan to income ratio would "warrant serious consideration from a financial stability perspective."
Mr McGrath said that the "ball is very much in the Government's court in relation to the future of this loan scheme."
He said: "The Central Bank isn't raising any concerns that would prevent the extra money being provided so that applicants can actually get loans."
Mr McGrath said the scheme has "real merit" and that is proven by the level of demand.
"There is an undoubted demand there among people who are seeking to access mortgages as first time buyers and are having real difficult in getting that mortgage from the bank. This loan scheme should only ever be providing loans to credit worthy customers but who, for one reason or another, have a genuine difficulty accessing a mortgage," he said.
The Department of Housing said it is in discussions with the Department of public Expenditure and Reform about more money being made available.
It said it will be in a position to make an announcement when those talks have concluded.
It said the scheme is still open and local authorities can continue to process applications while talks over funding are taking place.
