Central Bank of Ireland exempts principal home bridging loans from loan-to-income limits under mortgage measures

The Central Bank of Ireland has announced a targeted amendment to its mortgage measures that exempts certain principal home bridging loans from the loan-to-income (LTI) limit. Loan-to-value (LTV) limits continue to apply to these products and all other elements of the mortgage measures remain unchanged. A “principal home bridging loan” is defined as a short-term facility of no more than 18 months that enables existing homeowners to buy a new principal home before selling their current one, with repayment expected from the sale proceeds rather than regular income. To qualify for the exemption, the loan must not impose an obligation to repay the capital during its term, and the first-time buyer/second and subsequent buyer LTV limit applies, with the LTV calculation based on the original principal home. No changes are being made for buy-to-let bridging loans because the framework already applies an LTV limit only (with no LTI limit) to buy-to-let lending. The Bank also reiterated that the measures do not replace lenders’ own underwriting standards, that consumer protection rules apply in full, and that lenders must assess suitability and affordability and ensure borrowers are informed of the risks. The Central Bank will monitor how the exemption operates as part of its regular assessment of the mortgage measures, including for unintended consequences or emerging risks.