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Housing Loans Increase by More Than 40% in One Year

13 September 2017

Bank financing for home purchases fell in July from the previous month – which registered the highest amount since 2010 – but is still on the rise and continues to be the primary driver of lending to households in Portugal. Proof of this is that the 683 million euros of mortgage loans granted by banks in this segment in July this year correspond to an increase of 41% compared to €485 million in the same month in 2016, according to the latest data from the Bank of Portugal.

Successive cuts to bank spreads reflect the bank’s willingness to continue lending money to finance the purchase of homes. The average minimum margin is down to 1.5%. For the first seven months of the year, the volume of new loans totalled 4.504 billion euros, the highest figure in the last seven years – only surpassed in 2010 when banks granted loans worth 6.141 billion euros.

Property accounted for almost 20% of all lending to individuals and businesses in July and was the main reason for the 23% increase in the granting of credit to households seen in July (y-o-y). In total, banks loaned 1.173 billion euros to families this month, compared with €954 million in July last year.

Compared to the previous month, the amount loaned by financial institutions fell slightly in July, both for households and for companies.

Portuguese banks lent 1.173 billion euros to individuals in the period under review. That figure that fell short of the 1.286 billion euros contracted in June.

Banks loaned 683 million euros for the purchase of homes, less than the 754 million euros granted in June.

According to the Bank of Portugal, the average interest rate in July was 1.59% (1.69% in June), a historic low.

Original Story: Idealista

Translation: Richard Turner