Change in mortgage rules to benefit downsizing homeowners

Tánaiste and Minister for Finance Simon Harris has written to Central Bank Governor Gabriel Makhlouf to support the bank's plans to reform mortgage lending rules.

According to the expected changes by the Central Bank, certain types of bridging loans will be exempt from the loan-to-income limit.

It currently restricts the amount of money people can borrow to a maximum of four times gross income for first-time buyers and three and a half times gross income for second/subsequent buyers.

The changes are expected to benefit people who may be retired, on lower incomes and who wish to purchase a smaller, more suitable property.

In a statement, the Tánaiste confirmed that he wrote this week to the Governor to support the initiative.

"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," Mr Harris said.

While bridging products are already available in the market, this change is expected to remove any potential impediments to this type of lending.