A new loan to support homeowners trading down is set to be piloted by Bank of Ireland next year.
The new initiative will be available to all homeowners, whether they are existing customers of the bank or not.
Bank of Ireland said the lending product, which will be launched early in the first quarter of 2026, is among a number of initiatives to "accelerate housing supply".
The bank is also exploring other product innovations, which it said will be "focused on supporting expanding families to trade up to a larger property".
Structured like traditional bridging finance, Bank of Ireland’s Trade Down loan will, in the first instance, facilitate homeowners keen to move to a smaller property and will allow funds to be released to enable the outright purchase of a new property in advance of the sale of their current home.
Both properties will serve as security on the trade-down loan, with the sale of the existing property clearing the borrowing and any interest accrued within 12 months.
The maximum borrowing amount at drawdown will be 60 per cent of current valuation while the loan rate on the short-term bridging loan will be 7 per cent, more than double many of the fixed-rate mortgage offerings on the market.
Bank of Ireland says the initiative is designed to support new housing supply and was informed by the deliberations of a group of private sector representatives – drawn from home builders, equity investors, representative bodies and select professional services that it brought together.
The bank is the first of the big three domestic lenders to offer bridging since the option was pulled from the Irish market in the wake of the financial crash.
Bank of Ireland said it has also written to the Government to propose what it described as a regular housing finance forum.
The bank said the forum could be used by senior officials and private sector leaders to "exchange insight, discuss latest market developments and provide feedback with the goal of working together to sustainably increase home building".
Bank of Ireland is to also join other national banks in collaboration with Government bodies to work with smaller home builders to create a mentoring programme.
It said the objective of the programme will be to "support smaller developers to professionalise and scale up their businesses to ensure the development of a sustainable and vibrant home building sector in Ireland".
The Group chief executive of Bank of Ireland said the issues impacting housing supply are "multifaceted and include a range of well-aired matters such as planning, zoning and the availability of serviced land".
Myles O'Grady said while those are "outside the direct control of the private sector, we hold an important piece of the solution, financing for the construction of homes".
"This is why we invited a group of senior private sector leaders to come together to examine any steps that haven’t been taken to date and consider any specific blockages that might be removed," he said.
Mr O'Grady said Bank of Ireland is supporting home building in a wide range of ways.
"This includes the provision of equity finance and we will continue to work with partners to explore new equity solutions," he said.
"Banks have a significant role to play in driving housing supply, which is a key societal and economic priority for the country. We will continue to play our part in helping solve this issue and challenge ourselves to do more," he added.
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