Novo Banco carried out almost 18 thousand mortgage loan reviews until September

Novo Banco has already revised almost 18 thousand mortgage lending agreements until September due to the difficulties of clients with loan repayments.

Novo Banco announced this Thursday that its profit between January and September amounted to 638.5 million euros, an increase of 49% compared to the first nine months of 2022.

When asked by Lusa about the renegotiation of housing loans, an official source from Novo Banco said that “about 17,700 contracts were renegotiated, mainly with a reduction in spread/interest rates, which was reflected in the corresponding results.”

In the first nine months of the year, 1,360 housing loan contracts were also concluded, the interest on which was subsidized by the state (in accordance with Decree ei 20-B/2023, according to which the state pays part of the increased interest to customers in difficulty, under certain conditions).

Rising interest rates have created problems for many families paying off their mortgages as they impact variable rate contracts with significantly higher monthly payments. To mitigate the immediate impact, banks renegotiated their loans and the government took action. From this Thursday until the end of March 2024, bank customers can request from their bank access to a regime that locks in installments on a mortgage loan for two years and for an amount below the current one.

Anyone accessing this facility will have to pay a lower fee over two years, as this fee will be indexed to 70% of the six-month average Euribor amount of the month preceding the client’s request (ensuring that they will pay less over the course of two years than if the Euribor rate had been reflected at 100%).

After these two years, in the next four years, the benefit takes on its “normal” value (with a full reflection of the index at that time). After these four years, families will pay the remaining premiums for the amount outstanding while they took advantage of the above reduction.

This Monday, in a publication on the bank’s client portal, Banco de Portugal stated that compliance with this regime implies that “the total amount of interest paid will always be higher.”