CBI amends mortgage rules for principal home bridging loans
The Central Bank of Ireland is amending its mortgage measures to exempt certain principal home bridging loans from the Loan-to-Income (LTI) limit. This targeted change aims to support housing market functioning and competition in the second-hand market.
Targeted LTI exemption for bridging finance
The Central Bank of Ireland (CBI) has introduced an exemption for specific principal home bridging loans from the Loan-to-Income (LTI) limit.
A "principal home bridging loan" is defined as a loan facilitating the purchase of a new primary residence before the sale of an existing one.
These loans must have a term of no more than 18 months and not require capital repayment during their term.
The Loan-to-Value (LTV) limit for first-time buyers (FTB) and second-time buyers (SSB) will continue to apply to these bridging loans.
The CBI notes that for such products, where repayment is tied to property sale proceeds rather than regular income, the LTI restriction is less relevant to promoting affordability.
The LTV requirement remains a key consideration to mitigate potential negative equity at settlement.
Supporting market liquidity and competition
The amendment reflects the evolution of Ireland's mortgage market, with bridging finance products re-emerging.
The CBI assessed that this change supports wider housing market functioning by enhancing liquidity in the second-hand market and offering additional options for homeowners.
The exemption also aims to foster fair competition, particularly for smaller or specialised lenders who may have less flexibility under the existing framework.
The Central Bank engaged with industry and civil society stakeholders, whose feedback was generally supportive of bridging finance as an element of a functioning mortgage market.
The CBI will monitor the exemption's operation to ensure it functions as intended and to identify any unintended consequences, anticipating a low impact on overall resilience.