43
43

Banks Lend €919 Million in Mortgages in July

11 September 2018

Compared with the 682 million euros of housing loans granted in the same period in 2017, there was a year-on-year increase of 34.8%.

Loans granted by residential banks totalled 919 million euros in July, with lower average interest rates than in the month in which the Bank of Portugal’s (BdP) new rules came into force, the supervisor stated Tuesday.

In July, the amount borrowed from Portugal’s banks for the acquisition of homes declined by 71 million euros compared to the 990 million euros lent in June – the month with the highest figure of the last eight years. Nevertheless, it was the second highest monthly figure of the year.

Compared with the 682 million euros of housing loans granted in July 2017, there was a year-on-year increase of 34.8%.

Regarding new residential mortgages, the average interest rate decreased by ten basis points to 1.35%, a new low for the series.

In July, the Bank of Portugal’s new recommendations came into force, creating restrictions on the granting of new housing and consumer loans, stating, for example, that households may only spend half of their income on the repayment of bank loans.

Although not mandatory, banks that fail to comply must justify their failure to the supervisor.

The governor of the Bank of Portugal, Carlos Costa, warned in parliament in May that if banks do not respect the rules that the central bank may make the recommendations binding.

In the first seven months of the year, Portuguese banks lent 5.693 billion euros in mortgages.

At the end of July, the total stock of housing loans amounted to 92.857 billion euros, the highest since March (92.937 billion euros).

Regarding consumer loans, new operations amounted to €387 million in July, down by €32 million compared to €419 million in June, but €58 million more than in the same month in the previous year. The banks’ holdings of consumer loans amounted to €14.602 billion on July 31 of this year, the highest level since February 2012 (€14.622 billion).

New loans for other purposes amounted to 143 million euros in July, 3 million euros less than in the previous month and 19 million euros less than in the same period last year.

In July, the annual rate of change of loans granted by banks to individuals (housing) increased by one-tenth of a percent compared to the previous month, to -1.0%.

In the same month, loans granted by banks to non-financial corporations showed an annual rate of change of -0.6%, the same amount as in the previous month.

Private deposits with local banks totalled 143.1 billion euros at the end of July 2018, an annual increase of 2.0%. This indicator decreased by 0.7 percentage points compared to June.

Also according to the BdP, the average interest rate on new loans granted to non-financial corporations reached 2.37% in July, an increase of one basis point compared to the previous month.

“This reflected a two-point increase in the interest rate on operations below one million euros to 2.68%, partially offset by the greater weight of operations above one million euros, which have a lower average interest rate, 2.04% (1.97% in June),” it stated.

In consumer credit and for other purposes, average interest rates stood at 7.07% (7.0% in June) and 3.91% (3.62% in June).

The average interest rate on new deposits of up to one year for non-financial corporations stood at 0.14%, up three basis points from the previous month, while in private households the average interest rate on new deposits up to one year reached 0.13%, a new low for the series.

Original Story: CM Jornal / Lusa

Photo: Pedro Catarino

Translation: Richard Turner