The average bank repayment term for a house fell last year to 30.6 years, according to a report on family lending published this Monday by the Bank of Portugal (BdP). The value is higher than what the institution wanted – 30 years – but better than 33 years in 2018, when the regulator decided to tighten the rules for issuing loans and closely monitor their compliance.
In addition to the reduction in home loan repayment period, there has also been an “improvement in the risk profile of borrowers in new home lending operations while reducing the percentage of credit provided to high-risk borrowers.”
This dynamics is mainly associated, according to the regulator, with an increase in the share of new housing loan transactions with the difference between the cost of real estate and a loan less than or equal to 80% against the backdrop of rising interest rates. and housing prices. On average, banks lent 69% of property values, up from 78% recorded in 2018.
These are signs that banks are complying with the rules set out in 2018 by the BdP by being prudent when granting loans.
The purpose of these more restrictive lending rules is, the institution guarantees, to “strengthen the soundness of financial institutions and minimize the risk of borrower default.”
The banking regulator also refers to the large number of credit transfers between institutions and admits that this phenomenon may have a “significant impact on the analyzed data”, since these loans are considered new to the monitoring carried out.
DETAILS
Risk
Mortgage loans issued last year to high-risk clients (above 60% spend rate) accounted for 3% of the total (same proportion from 2020), and medium-risk clients accounted for 36% of the total (below 48% of 2022).
Seven years
More than 80% of loans issued last year for the purchase of a car must be repaid within five to seven years. With repayment terms between seven and 10 years, only about 1% of car loans are issued, according to Banco de Portugal.
Observation
Banco de Portugal’s monitoring of personal credit – with the aim of preventing it from being used as a complement to mortgage loans – yields the results: less than 1% of the total amount issued in 2023 was provided simultaneously to customers with housing and personal loans.
Author: Raquel Oliveira
Source: CM Jornal
I’m Tifany Hawkins, a professional journalist with years of experience in news reporting. I currently work for a prominent news website and write articles for 24NewsReporters as an author. My primary focus is on economy-related stories, though I am also experienced in several other areas of journalism.