Source: Government of Ireland
The Tánaiste further stated:
Notes for editors
The Government’s 2025 action plan on housing supply – ‘Delivering Homes, Building Communities 2025-2030‘ – indicates that it ‘will further support older households who choose to voluntarily property ‘rightsize’ and advance the consideration of the availability of bridging finance to support ‘rightsizing‘.
Bridging finance is short-term finance which is commonly used to facilitate the purchase of a new property prior to the sale of an existing property.
The Central Bank of Ireland’s macro prudential housing loan measures are provided for in regulations made by the Central Bank under the provisions of section 48 of the Central Bank (Supervision and Enforcement Act) 2013.
These regulations set out loan to value (LTV) and loan to income (LTI) restrictions on residential mortgage credit provided to consumers by Central Bank regulated entities.
In relation to principal dwelling homes, the current LTV limit is 90% of the property’s value and the LTI limit is 4 times income in respect of first-time buyers and 3.5 times income for second and subsequent buyers. These restrictions currently apply to bridging finance for residential purposes.
Lenders have a discretion to provide a certain amount of mortgage credit outside these thresholds, and that discretion can and is used to provide a certain level of bridging finance.
However, the current measures may still be impacting some lenders’ ability to offer this type of finance. The Central Bank of Ireland has decided to address this through a targeted adjustment to the lending rules.
The change, which will be provided for in regulations made by the Central Bank, will exempt bridging finance which is used to purchase a new primary house from the LTI limit. This is subject to the bridging loan being for a period of no more than 18 months and the loan being repaid on the sale of the original principal home or at the end of the loan term.
In accordance with the statutory requirements, the Central Bank has consulted the Minister for Finance on this change to the lending rules. The Minister for Finance has indicated that he supports this Central Bank decision.
While this change to the mortgage lending rules will provide enhanced flexibility to lenders in relation to the consideration of applications for bridging finance, ultimately it is a commercial decision for each lender to determine their own lending policies, such as deciding whether or not to offer a particular type credit product, and to make their own decisions on individual applications for credit.
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