Bank of Ireland Launches Bridging Loans to Ease Housing Market Crisis

URGENT UPDATE: Bank of Ireland has just announced a groundbreaking initiative to address the housing crisis in Ireland. Starting early next year, the bank will offer a new type of bridging loan designed to facilitate homeowners downsizing from larger properties without the need to sell their current homes first. This critical financial tool aims to alleviate stagnation in the housing market that has left many potential buyers hesitant.

The new Trade Down loan will enable homeowners to access funds to purchase a smaller property outright before selling their existing home, effectively breaking the current bottleneck in the market. This program is expected to significantly increase housing supply by allowing more transactions to occur. The loan will be available to both Bank of Ireland customers and non-customers alike.

The maximum borrowing amount will be 60% of the current property valuation, with a short-term interest rate set at 7%, which is considerably higher than many fixed-rate mortgage options currently available. Homeowners will have up to 12 months to sell their existing property, during which time they can clear the loan and any accrued interest.

Myles O’Grady, CEO of Bank of Ireland, emphasized the importance of this move: “The issues impacting housing supply are multifaceted… While these are outside the direct control of the private sector, we hold an important piece of the solution – financing for the construction of homes.”

This initiative comes in response to extensive discussions with a group of private sector leaders who highlighted the pressing need for innovative financing solutions to stimulate home building and ownership. These discussions have informed the development of this loan product, which is designed to better utilize the existing housing stock.

As house price inflation reached 7.6% in September, the urgency for solutions has never been greater. This new loan could be a game-changer for families looking to downsize and for those aiming to enter the housing market, fostering a more dynamic real estate environment.

Looking ahead, Bank of Ireland is also exploring additional products to assist expanding families who wish to upgrade to larger homes. As they continue to address housing supply challenges, O’Grady has urged the government to establish a regular housing finance forum to collaboratively tackle these critical issues.

Stay tuned for more updates as this story develops and for further details on how this new financial product could reshape the housing landscape in Ireland.