Tánaiste Joan Burton has said she might favour a return to a situation where county councils acted as low-cost mortgage providers for some households.

Ms Burton said yesterday that county councils in the past had offered different mortgage products to families who were not in a position to get full bank financing.

She said her own preference was that local authorities would explore the possibility of providing such products again.

She was responding to solutions put forward to overcome difficulties with mortgage distress cases, as well as reported difficulties of new home owners in meeting the more stringent deposit requirement of 20 per cent of value.

First-time buyers’ grant

Asked about a suggestion by her colleague Joe Costello that the first-time buyers' grant be reintroduced, with a value of between €3,000 to €5,000, she said there had been no detailed discussion on the subject at Government level.

"There is agreement about the value to Irish society of home ownership being accessible to young people," she said on the This Week programme on RTÉ Radio One.

She said the Government had to be prudent in how it approached this issue and that her own preference was for county councils to offer low-cost mortgage products for new home owners, as had been done in the past.

When it was pointed out that local authorities do not have the finances to do that at present, she responded that some of those solutions would become available as the economy continued to recover.

Local authority approval

Some local authorities have continued to approve mortgages during the recessions. Those who cannot obtain a loan from a bank or building society can apply for a mortgage from the local authority.

A total of 110 such approvals were made in 2012, with 174 in 2013.

The loans are available to a maximum value of €220,000. Under the rules, joint applicants must be earning €75,000 or less.

On demands for pay restoration in the public service, Ms Burton said those working in that sector had taken three reductions in pay and there was a case for this issue to be addressed as the economy came into recovery.

She said she did not want to preempt any discussions. On the question of pay increases being linked to productivity, she said more productivity made sense as it would lead to more efficiency and more money for services.