{"id":10425,"date":"2026-04-05T10:57:59","date_gmt":"2026-04-05T10:57:59","guid":{"rendered":"https:\/\/wangzhuan-idea.icu\/?p=10425"},"modified":"2026-04-05T10:57:59","modified_gmt":"2026-04-05T10:57:59","slug":"older-homeowners-who-wish-to-downsize-set-to-benefit-from-new-rule-change-from-central-bank","status":"publish","type":"post","link":"https:\/\/wangzhuan-idea.icu\/?p=10425","title":{"rendered":"Older homeowners who wish to downsize set to benefit from new rule change from Central Bank"},"content":{"rendered":"
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A rule that often means it is not financially viable for older people to take out a bridging loan when they attempt to downsize is to be scrapped.<\/p>\n

The Central Bank has decided bridging loans taken out by downsizers will be exempted from the rule that limits how much they can borrow.<\/p>\n

T\u00e1naiste and Finance Minister Simon Harris has welcomed the change.<\/p>\n

The move could free up thousands of homes for young families if older people can find suitable homes to move to.<\/p>\n

The current rule means that downsizers have to be assessed as if they are taking out a new mortgage when they apply for bridging loans. Because many of them are on pensions or have a low income, they often do not qualify for bridging loans.<\/p>\n

Most people who downsize need a bridging loan to buy a new home while they wait for their existing one to sell.<\/p>\n

Otherwise they would be forced to find somewhere to rent while they wait for the purchase to be completed.<\/p>\n

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People taking out a bridging loan will still need a deposit of at least 10pc of the value of the property they are buying<\/p>\n<\/blockquote>\n

Under the current rules, all second-time buyers can borrow only three-and-a-half times their income. This is called the loan-to-income rule.<\/p>\n

It is seen as too restrictive for downsizers because it blocks pensioners in particular from getting a bridging loan.<\/p>\n

The maximum length of a bridging loan under the new exemption will be 18 months and it applies to residential borrowing only.<\/p>\n

The change will be implemented by the Central Bank in the coming weeks.<\/p>\n

No change is being made to the loan-to-value rules, which means people taking out a bridging loan will still need a deposit of at least 10pc of the value of the property they are buying.<\/p>\n

However, the exemption could encourage thousands of \u201cempty nesters\u201d to sell their large homes and move to ones more suitable to their needs, thus freeing up homes for younger families.<\/p>\n

There is no suggestion from the Government that older people would be forced to downsize.<\/p>\n

Previous suggestions that older people in large properties should move home to free up the houses for younger families have drawn backlash from groups representing the elderly.<\/p>\n

Most older people want to stay in their homes, according to surveys, and they resent suggestions they should move to somewhere smaller.<\/p>\n

However, others see trading down as a viable move that would free up funds.<\/p>\n

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The Central Bank of Ireland. Photo: Getty<\/p>\n<\/figcaption><\/figure>\n<\/div>\n

An ESRI study in 2024 found Irish people generally live in larger homes than people in other EU countries and cited an \u201celevated level of under-occupation\u201d.<\/p>\n

It found that more than 88pc of people aged over 65 live in under-occupied accommodation.<\/p>\n

The Government has committed to initiatives to get older people to trade down to help ease the housing crisis.<\/p>\n

A Central Bank committee that looked at the issue at the end of last year concluded that a change to the loan-to-income rules for downsizers was needed.<\/p>\n

The committee said regulator rules \u201cshould not impede market functioning or the mobility of downsizers unnecessarily\u201d.<\/p>\n

The T\u00e1naiste wrote to Central Bank governor Gabriel Makhlouf this week to support the initiative.<\/p>\n

\u201cThis is an important measure in our efforts to increase housing choice for older people and I commend the Central Bank and Governor Makhlouf for adopting such a sensible, pragmatic approach,\u201d Mr Harris said.<\/p>\n

He said the delivery of more suitable homes for older people and supporting people who wanted to downsize was an important element of the Government\u2019s overall approach to housing.<\/p>\n

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Consumer protection rules apply and institutions must fully inform borrowers of the risks<\/p>\n<\/blockquote>\n

He said the change would particularly benefit people who may be retired, on lower incomes and who wanted to buy a smaller, more suitable property.<\/p>\n

Last November, Bank of Ireland piloted what it calls Trade Down, a bridging loan for older people who are downsizing. Interest is charged at 7pc.<\/p>\n

ICS Mortgages also has a bridging loan, but it is considered expensive because the interest rate is as high as 10pc.<\/p>\n

It is hoped the scrapping of the loan-to-income rule for downsizers will encourage more lenders to offer bridging finance and at more competitive rates.<\/p>\n

One source said the change did not diminish the broader obligations of lenders to their customers.<\/p>\n

Consumer protection rules apply and institutions must fully inform borrowers of the risks and ensure that bridging finance is appropriate for each customer\u2019s circumstances.<\/p>\n

Before arriving at its decision, it is understood the Central Bank engaged with civil society stakeholders and with the lenders.<\/p>\n<\/div>\n

source<\/p>\n","protected":false},"excerpt":{"rendered":"

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