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Residential Mortgages Have Best April Since 2010, as Rates Fall

13 June 2018

The mortgage lending business is on the rise, in line with the current dynamism of the real estate sector in Portugal. Last April, banks lent 783 million euros for the acquisition of homes, according to the latest data from the Bank of Portugal, published Tuesday, June 12, 2018. This figure is below the amount granted in the month but is significantly higher than the corresponding period in 2017. It was the best April for the indicator in eight years.

In the first four months of 2018, 2.969 billion euros in residential mortgages were granted, the highest amount since 2010. In the same period in 2017, 2.339 billion euros had been loaned, for a year-on-year increase of 26.9%.

The banking regulator’s figures show that 783 million euros of housing loans were granted last April, 10% less than the 876 million euros granted in March this year.

However, it was 46% higher than the amount loaned in the same month last year, and the highest amount for the month since 2010, when 807 million euros were lent.

Interest rates on new housing loans fell again

Meanwhile, the average interest rate on new contracts fell in April by three basis points to 1.46% compared to March, according to data from the BdP, released Tuesday.

The decrease in the interest rate, following a similar decrease in February, reflects the continuing tightening of spreads, the margin that banks apply to benchmark interest rates.

The Portuguese central bank has demonstrated concern about the decline in spreads, which may result in loans for customers who may have difficulty with payments once interest rates start rising. This concern led the BdP, led by Carlos Costa, to make recommendations to the banks, which will take effect in July.

Original Story: Idealista

Translation: Richard Turner