Spain 
Italy 
Greece 
The Portuguese Are Increasingly Paying off Mortgages Ahead of Time
16 August 2017
The dynamism in the Portuguese real estate sector, coupled with low interest rates and an improvement in Portugal’s economy, is now also having an effect on payments of housing loans. The number of mortgage payments increased by almost 30% in one year, with more than 85,000 payments made in 2016, for a total amount of €3.2 billion. Close to 70% of these payments were used to pay off the full amount of the mortgage. In several cases, the intent is to apply for new loans.
The 2016 Retail Banking Monitoring Report, recently published by the Bank of Portugal (BdP), shows that there were 28% more mortgage payments than in 2015. This increase was due “exclusively to total early repayments, since the number of early partial repayments decreased between 2015 and 2016. ”
About 68% of advance payments were total, more than the 58% seen in 2015. Almost a quarter of total repayments were below 13,091 euros, while half were below 35,918 euros.
According to the central bank, “the increase in total early repayments on mortgage lending may be associated with the greater dynamism of the real estate market, since switching homes often involves full repayment of existing housing loans and contract additional loans to finance the new house.”
Despite the boom in the mortgage lending business, prepaid loans ended up outweighing new loans. Last year, 57,912 loans were approved for the purchase of homes, for a total of 5.5 billion euros. The increases were 34.2% and 39.6% over the previous year, respectively.
“Early repayments and maturities in 2016 exceeded the amount granted in new loan contracts, which translated into a reduction in the overall value of the portfolio at the end of the year (€88.4 billion, compared with €90.5 billion euros in 2015),” the Bank of Portugal stated.
Original Story: Idealista
Translation: Richard Turner