• Published date: 05 April 2024
• Publication title: Irish Times (Dublin, Ireland)

But as well as an emotional attachment to a family home – and the area it is located in – there is a more prosaic reason why many don’t downsize after the kids have left. It is the lack of a clear, low-risk financial route to do so. There is, for sure, often a lack of options in terms of smaller houses or apartments in the same locality – but even when there are options, selling your existing home and buying a new one is not straightforward in today’s market

Step forward a concept known only to older readers who can remember back before the financial crash to the era of the bridging loan. This was a shorter-term loan extended by a bank, typically to bridge the period between paying for a new house and selling an old one. For example bidding at an auction, typical in the Celtic Tiger era, required the ability to pay a deposit up front and close the deal within a defined period, often requiring short-term finance before a mortgage could be drawn down. The interest rate was typically above the normal mortgage cost, but as the loan was for a short period the borrower generally was able to manage.

Bridging loans disappeared after the financial crash. But brokers and estate agents believe the return of such facilities could help free up the second-hand property market, where the number of available houses is at a historic low. A recent report from Sherry FitzGerald estate agents found just 11,050 second-hand properties were listed for sale in January this year, representing a mere 0.6 per cent of the entire private housing stock in the Republic, with rural and regional Ireland disproportionately affected. A rate of 3-4 per cent, at least, would be more normal in a functioning market.

Cash is king

A key goal of the return of the bridging loan would be to help potential “downsizers”, many of whom are unwilling to take the risk of selling their own property when they don’t have one to move to already in the bag. And in today’s market where cash is king, they normally would not have the cash to bid on a new home and are facing vendors who simply do not have to bother getting into old-style “I’ll buy your house if I can sell mine” property chains. There are, after all, queues of potential buyers with cash, or mortgage approval.

In their 60s and 70s, people simply do not want to take big risks with their money, according to Michelle Kealy, divisional director with estate agent Lisney Sotheby. And with rental properties scarce and very expensive, she points out that...