Banks Foresee Increasing Demand for Housing Loans

24 January 2018

The majority of Portuguese banks foresee an increase in demand for housing and consumer credit up to March of this year, after substantial growth at the end of 2017, according to the five banks which participated in a credit market report by the Bank of Portugal (BdP).

“Most banks do not anticipate significant changes in the demand for loans from companies, while in the case of individuals, four of the participating institutions anticipate a slight increase in the demand for loans in both credit segments,” reads the statement from the BdP.

Most institutions “believe that improved consumer confidence and the general level of interest rates contributed slightly to an increase in demand in the mortgage lending segment,” thus leading to the higher demand in the last quarter of 2017.

Demand will increase, but the criteria for lending will remain. Banks say they remained stable in the previous quarter and did not expect “changes in their credit approval criteria for granting loans to companies and individuals.”

CDG offering reduced spread until end of month

Aggressive campaigns to sell credit are nevertheless dominating the market. Even the Caixa Geral de Depósitos (CGD) has entered the fray. The state-owned bank decided to lower the spread it offers to consumers, according to Jornal de Negócios. CGD has had the highest spread in the market for almost three years, with a minimum margin of 1.75%. However, until the end of the month, the bank is extending loans with a spread of 1.6%, still the third highest in the sector. Bankinter currently offers the lowest.

The state-owned bank has a marketing campaign called “Caixa Casa Fast,” a tool whereby the bank offers the possibility of getting a residential mortgage loan in a total of fifteen working days, from the credit simulation to a decision on whether the loan will be granted.

Original Story: Idealista

Translation: Richard Turner