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Housing Loans Accelerate as the Year Begins

13 March 2018

In January, banks provided 634 million euros in loans for the acquisition of residential real estate, the highest amount, year on year, since 2010.

The start of the year was marked by further acceleration in the concession of housing loans. The number of loans granted by domestic banks for home purchases in January reached an eight-year high, according to data the Bank of Portugal released on Tuesday.

The regulator led by Carlos Costa stated that 634 million euros of new loans for home purchases were granted in the first month of the year. This is the highest amount, on a year-on-year basis, since 2010.

It is a continuation of the acceleration that has taken place over the last few years in home lending. Developments following the improvements the country’s and families’ economic prospects, as well as the greater willingness of financial institutions to provide financing. The banks’ increased interest in extending mortgages has become evident by their tightening spreads and numerous marketing campaigns targeting the segment.

As is normally the case, there was a slowdown in lending activity when comparing December 2017 to January of this year. In December 2017, banks granted 819 million euros in housing loans.

A similar trend has been observed in the concession of consumer credit. In January, banks loaned 342 million euros for this purpose, below the €401 million in December. It is a high, however, for that month. The total amount granted in January was the most since 2004.

Concerning loans to individuals for other purposes, 135 million euros were granted in January, down from €183 million in December, and below the €139 million recorded in January last year.

In aggregate terms, banks granted 1.111 billion euros in new loans to individuals in the first month of this year, the highest level in year-on-year terms since the same month in 2010, eight years ago.

There was also an increase in corporate lending in January. The banks lent 2.948 billion euros to companies, up from the 2.265 billion granted in the same period last year, also the highest amount since 2014, year-on-year.

Original Story: Economia Online – Catarina Melo

Translation: Richard Turner