The government guarantee of home loans for young people still raises many doubts, although the government continues to withhold further information and the Bank of Portugal asks for caution not to create instability for banks and customers.
A public guarantee providing bank financing for young people to buy their first home was already part of the electoral program of the Democratic Alliance (PSD, CDS-PP and PPM coalition) in the legislative elections of 10 March, and in May with Luis Montenegro’s Government, being Prime Minister. minister, approved the measure in the Council of Ministers and said he wanted it to come into force on August 1.
However, the approved decree-law and other documents regulating this measure are still unknown.
The government guarantee is intended for young people under the age of 35 and with income up to IRS tax bracket 8 (€81,199 annual taxable income) and applies to houses worth up to €450 thousand. The state will guarantee up to 15% of the purchase price of real estate and intends to create conditions so that young people can receive a loan of up to 100% of the cost of the house.
This is one of the points that has caused alarm on the part of the Bank of Portugal, since Governor Mário Centeno has stated several times that this measure must be legislated and regulated in a careful manner, since banks cannot facilitate compliance with the rules for granting home loans. .
The macroprudential rules currently in force stipulate that the loan cannot exceed 90% of the home value (which for this purpose is considered to be the lesser value between the acquisition cost and the assessed value) of the owner’s and permanent home. They also point out that, as a general rule, a client should not spend more than 50% of their income on renting a house to the bank (called the effort rate).
“Macroprudential guidance should be taken very seriously,” Centeno said at a May 28 press conference.
On June 7, again to journalists, the former Minister of Finance (PS government led by António Costa) explained that the Bank of Portugal always advocates measures that help the young population gain access to housing, but that “caution” is necessary. “Because it is necessary to ensure both the financial stability of the bank and the ability of clients to repay the debt.
“If the amount [do crédito] increases, and if income doesn’t increase, that means there’s a good chance people will exceed their debt service ratio” relative to income, he warned.
Regarding the decree law on state guarantees, Mario Centeno said that the Bank of Portugal was not aware of it before its approval. On June 7, he announced that the BJP would begin working with the government to regulate the measure in the coming days.
Lusa contacted the Bank of Portugal, which referred to recent statements by Centeno and the government. The Portuguese Banking Association also did not comment on the situation.
Announcing the approval of the state guarantee at the end of May, Presidential Minister Leitan Amaru explained that “the guarantee exists until the young person pays the first 15% [do empréstimo] bank”, specifying that upon payment of these 15% “The State [fiador] out of the equation.”
Author: Lusa
Source: CM Jornal
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