The Central Bank of Ireland today announced the changes to the mortgage measures, which are macroprudential regulations that set limits on mortgage lending to support sustainable lending standards and protect the resilience of borrowers and the financial system.

While exempting certain loans from the LIT limit, the loan-to-value (LTV) limit will continue to apply to these products, and all other elements of the mortgage measures remain unchanged.

The amendment recognises that bridging finance products are a feature of the evolving Irish mortgage market and ensures that the regulatory framework adapts appropriately to continue to support market functioning without compromising lending standards or resilience of borrowers and lenders in the mortgage market.

Within the measures, a principal home bridging loan is a short-term loan (with a maximum term of 18 months) that facilitates existing homeowners to purchase a new principal home before completing the sale of their current property. Unlike standard mortgages, these loans are repaid from the proceeds of the property sale rather than from regular income.

The Central Bank’s deputy governor, Vasileios Madouros, said: “This targeted amendment reflects our commitment to ensuring the mortgage measures remain fit for purpose as the market evolves.

“Bridging loans serve a purpose in helping homeowners move between properties, and the LTI limit is less relevant for products where repayment comes from asset sale proceeds rather than regular income.

“All other elements of the mortgage measures are unchanged. This is a proportionate response to market developments that maintains our core objectives of sustainable lending.”

The mortgage measures do not aim to replace lenders’ own prudent underwriting criteria. Lenders must continue to assess the suitability and affordability of bridging loans for individual borrowers. Consumer protection rules also apply in full to these products.

The Central Bank said the amendment was developed following engagement with civil society stakeholders and with industry and it will monitor the operation of the exemption.

Welcoming the change, Tánaiste and finance minister Simon Harris said: “This 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.

“This change to the lending rules is in line with the government’s housing plan commitment on the availability of bridging finance to support rightsizing. It is an important measure in our efforts to increase housing choice for older people and I very much welcome the development.”

He added: “This change can facilitate the provision of additional bridging finance while maintaining the protections that the mortgage lending rules provide for the financial system and consumers.”