Opens door to over-70s being able to revise repayment terms
With families everywhere faced with higher monthly mortgage payments due to increasing interest rates, the government’s new ‘draft law’, published last Saturday, allowing renegotiation of contracts means a great deal.
It means that cash-strapped families will be given options. The ghastly memories of mass repossessions/ evictions during the ‘austerity years’ (following Portugal’s bailout) will not be returning.
At least, that is the intention – and while the Bank of Portugal has ‘recommended’ that maximum terms do not exceed the moment where borrowers reach the age of 70, there is nothing in the new diploma that insists on this.
According to tabloid Correio da Manhã, renegotiation of mortgages will be without age limits.
The measure will remain in effect until December 31, 2023, and until that date anyone who feels they need to renegotiate terms of payment and whose situation ‘complies with all the conditions’ set, can request as much.
Initially, it is up to the banks themselves to identify the people who will need this help.
Negocios online explains that banks have 45 days from the start of the measure to make evaluations “and detect clients” whose situations would apply.
The government’s understanding is that “almost all” mortgage contracts fall into the ambit of the measure (which applies to first property mortgages of up to €300,000 on variable Euribor rates).
Secretary of State for the Treasury João Nuno Mendes has referred to roughly €100 billion in housing stock, held by two million clients and involving 1.4 million contracts.
So far, Catholic charity Cáritas says it has “started to receive requests for help from people who cannot pay their mortgages”, thus this new diploma could not have come at a better time.
Newspapers today add that Euribor levels are reaching ‘new maximums’, while president of the European Central Bank Christine Lagarde has said Euro zone inflation “has not peaked and risks turning out even higher than currently expected”.
Her comments, along with remarks by Dutch central bank chief Klaas Knot earlier, have been interpreted as “likely to dampen speculation that the ECB was about to take a gentler path with future (interest) rate increases”.