Major private banks have renegotiated the terms of more than 73,000 home loans through September due to difficulties in paying families monthly installments.
Santander Totta has renegotiated the terms of more than 36,000 home loans since the beginning of the year, an official source told Lusa.
Novo Banco has completed 17,700 renegotiations and BCP has completed over 16,000 renegotiations.
BPI did not disclose the total number of renegotiated terms, only saying that the total value of the renegotiated loans was 950 million euros.
According to him, only in accordance with Decree-Law 80-A/2022, loans amounting to 414 million euros were renegotiated, covering 3,400 clients. Thousands of loan renegotiations are carried out under government legislation, but most are carried out through commercial agreements between the customer and the bank (commercial renegotiation).
Caixa Geral de Depósitos (CGD) will only reveal these data when it publishes its financials for the first nine months of the year on the 10th.
Loan renegotiation can be done in several ways: by reducing the “spread” (the bank’s commercial profit), increasing the loan repayment period or a grace period when repaying capital (for example, for one year the client pays only interest, which reduces the monthly payment but capitalizes the shortfall in future).
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 loan terms and the government took measures such as subsidizing housing loans for struggling families (subject to certain conditions).
According to an official source, Santander Totta has more than 10 thousand subsidized loans.
BPI has 4,700 clients who receive interest subsidies of an average of €10 per month.
BCP had 2,400 credit agreements with bonuses and the average bonus was €32 per month.
In Novo Banco, in the first nine months of the year, 1,360 housing loan agreements were concluded, the interest on which was subsidized by the state.
Since last Thursday, bank clients with a mortgage loan have been able to apply to join the regime, which establishes installment plans for two years and for a smaller amount than the current one.
The amount that clients do not pay for two years will be paid in the future, adding to the capital (this means that clients will pay more interest). Until September, the combined profits of the four main private banks operating in Portugal amounted to 2.301 million euros, almost double what they made in the first nine months of 2022.
The main item explaining the strong earnings growth is financial margin, which is the difference between what banks charge for loans and what they pay for deposits.