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New Housing Loans Increased in October

11 December 2018

The concession of mortgages loans granted by banks to Portuguese households increased in October to €811 million, reversing the downward trend of the previous three months, according to figures released today by the Bank of Portugal (BdP).

According to the latest data on loans and bank deposits, Portugal’s banks granted 811 million euros of mortgage loans to households in October, up from September’s 790 million euros and August’s 810 million euros and above the €706 million granted in October 2017.

More than €8 billion in housing loans already granted

Since the beginning of the year, Portugal’s banks have lent 8.104 billion euros worth of new housing loans, considerably higher than the 6.657 billion euros granted between January and October of last year.

According to the information released by the BdP in October of this year, the average interest rate on new loans granted to non-financial corporations stood at 2.43%, up seven basis points since the previous month.

For new residential mortgage loans, the average interest rate decreased by two basis points to 1.34%, corresponding to a new low for the series. For consumer credit and other purposes, average interest rates were, respectively, 7.22% and 4.19% (7.22% and 3.84% in September).

In July, the Bank of Portugal’s new rules came into effect, creating restrictions on the concession of new mortgage and consumer loans, stating, for example, that households can only spend half of their income on bank loans.

Although not mandatory, banks that fail to comply must explain why they did not do so to the BdP.

Original Story: Lusa / Diário Imobiliário

Translation: Richard Turner