Narrative:

ZZZ was reporting 300 ovc and wind 050 at 11 kts while at the gate. I discussed this with the dispatcher at the gate because I am high mins and the weather was at my mins. The only suitable approach was an ILS to xx which gave us a 6 knot tailwind. We both agreed that the flight was dispatchable and to give it a try and if it didn't work out to come back to ZZZ1. While getting vectored into ZZZ the controller reported that the wind was now 070 at 13 gusting into the low 20's. We knew that this would make it more difficult but decided to give it a try since the flight in front of us made it in on their second try and it was still within limits of the aircraft. Once we were and final with the localizer captured we both observed that the localizer needle would swing almost a full dot left and right; with the flight director and autopilot banking 20-25 degrees to attempt to follow it. Initially we thought it was just struggling with the wind but it continued the whole way down. When we finally broke out at 300 ft we were not at all aligned with the runway; we were quite a bit right. It quickly became apparent that no landing attempt should be made. After going missed we both decided that another attempt was useless because the wind was increasing and at the time we thought that maybe the ground equipment wasn't so good and trying an RNAV would not work because of the low ceilings. We decided to head back to ZZZ1 since I had discussed that ahead of time with dispatch and the first officer (first officer) and I had also talked about it too. After turning on final in ZZZ1 the localizer/flight director/autopilot did the exact same thing it did in ZZZ and it was now obvious it was actually the aircraft that had the issue. At one point the controller had asked us if we were on xyr instead of xyl since we were apparently off course. A quick check of the frequency and we confirmed we were. At that point I turned off the autopilot and hand flew the approach; flying a heading that worked at the times that the needle seemed to be steady. We broke out just below 1000 ft and I continued the approach visually and landed without incident. I should also note that both times the frequencies were identified and no other aircraft reported issues.although it was obvious from the first approach that something was off; it wasn't obvious until the second approach exactly what it was. Unless the issue started with our flight; a prior crew should have written up the issue with the localizer.I believe we did the right thing by not attempting another landing in ZZZ with such low IFR conditions and somewhat unreliable navigation equipment. When it became clear on approach to ZZZ1 what exactly the issue was; looking back now; we should have asked for an RNAV approach. At the time I knew the weather was fairly low at most airports nearby and although we did have a decent amount of fuel; was somewhat anxious to get on the ground since if the weather continued to get worse; as it was forecasted; would then be forced to fly another approach down to minimums instead of breaking out at 800 or 900 and having plenty of time to align the aircraft with the runway. Having to go missed and be re-sequenced in ZZZ1 could easily turn into an extra 15 or 20 minutes.this aircraft in particular needs to be thoroughly checked and fixed. I felt this was dangerous to be flying in IFR conditions with that equipment. In an area with significant terrain the deviations that I can imagine happened in ZZZ without us being aware initially could be catastrophic. I feel that because I had so much time in the plane that I was comfortable hand flying it for the entire approach and able to compensate fairly well with the issue. I would be concerned how a newer crew with little time in the plane would have flared.

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Original NASA ASRS Text

Title: EMB-145 First Officer reported an unstable approach occurred due an aircraft equipment malfunction.

Narrative: ZZZ was reporting 300 OVC and wind 050 at 11 kts while at the gate. I discussed this with the dispatcher at the gate because I am high mins and the weather was at my mins. The only suitable approach was an ILS to XX which gave us a 6 knot tailwind. We both agreed that the flight was dispatchable and to give it a try and if it didn't work out to come back to ZZZ1. While getting vectored into ZZZ the controller reported that the wind was now 070 at 13 gusting into the low 20's. We knew that this would make it more difficult but decided to give it a try since the flight in front of us made it in on their second try and it was still within limits of the aircraft. Once we were and final with the LOC captured we both observed that the localizer needle would swing almost a full dot left and right; with the flight director and autopilot banking 20-25 degrees to attempt to follow it. Initially we thought it was just struggling with the wind but it continued the whole way down. When we finally broke out at 300 ft we were not at all aligned with the runway; we were quite a bit right. It quickly became apparent that no landing attempt should be made. After going missed we both decided that another attempt was useless because the wind was increasing and at the time we thought that maybe the ground equipment wasn't so good and trying an RNAV would not work because of the low ceilings. We decided to head back to ZZZ1 since I had discussed that ahead of time with dispatch and the FO (First Officer) and I had also talked about it too. After turning on final in ZZZ1 the localizer/flight director/autopilot did the exact same thing it did in ZZZ and it was now obvious it was actually the aircraft that had the issue. At one point the controller had asked us if we were on XYR instead of XYL since we were apparently off course. A quick check of the frequency and we confirmed we were. At that point I turned off the autopilot and hand flew the approach; flying a heading that worked at the times that the needle seemed to be steady. We broke out just below 1000 ft and I continued the approach visually and landed without incident. I should also note that both times the frequencies were identified and no other aircraft reported issues.Although it was obvious from the first approach that something was off; it wasn't obvious until the second approach exactly what it was. Unless the issue started with our flight; a prior crew should have written up the issue with the localizer.I believe we did the right thing by not attempting another landing in ZZZ with such low IFR conditions and somewhat unreliable navigation equipment. When it became clear on approach to ZZZ1 what exactly the issue was; looking back now; we should have asked for an RNAV approach. At the time I knew the weather was fairly low at most airports nearby and although we did have a decent amount of fuel; was somewhat anxious to get on the ground since if the weather continued to get worse; as it was forecasted; would then be forced to fly another approach down to minimums instead of breaking out at 800 or 900 and having plenty of time to align the aircraft with the runway. Having to go missed and be re-sequenced in ZZZ1 could easily turn into an extra 15 or 20 minutes.This aircraft in particular needs to be thoroughly checked and fixed. I felt this was dangerous to be flying in IFR conditions with that equipment. In an area with significant terrain the deviations that I can imagine happened in ZZZ without us being aware initially could be catastrophic. I feel that because I had so much time in the plane that I was comfortable hand flying it for the entire approach and able to compensate fairly well with the issue. I would be concerned how a newer crew with little time in the plane would have flared.

Data retrieved from NASA's ASRS site and automatically converted to unabbreviated mixed upper/lowercase text. This report is for informational purposes with no guarantee of accuracy. See NASA's ASRS site for official report.