Home loans reach record in March 2019

The Portuguese borrowed a record €2.35 billion in mortgages from banks and credit lenders in the first three months 2019.

The figures released from the Bank of Portugal show that despite an overall modest slowdown in the economy, there seems to be no let-up in taking out home loans despite recommendations last year from the Bank of Portugal to the nation’s banks to show more prudence over lending.

The latest figures are a record not seen since the same period in 2010 and, according to the central bank led by Carlos Costa, the nation’s banks lent €870 million for home loans — a new high after two consecutive months of falling demand from potential buyers.

One would need to go back nine years to the first quarter of 2010 to see a higher amount of home loan lending. At that time, the credit market lent out €1.734 billion.

The total amount for the quarter in mortgages from all credit sources was €2.351 billion, a growth of 7.55% on the same period in 2018.

Nevertheless, the like-for-like increase of 7.55% is a far cry when compared with the 21.24% figure registered for the same period in 2018.

The overall slowdown could be the result of stricter voluntary controls introduced by the Bank of Portugal on credit concession recommending that the banks take more prudent account of the ability to pay not only at the time the mortgage is taken out but also in the event of future unexpected circumstances such as unemployment or ill health and injury.

These bank recommendations from the central bank, which have been in force since July 2019, are based on three types of limits that should be taken into account at the time of deciding if the mortgage goes ahead if not with a view to minimising the risk of default.

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