The annual balance sheet for the mortgage market in Portugal is positive. New home loans totalled 17.6 billion euros in 2024, 34% more than in 2023 and the highest figure since the Bank of Portugal (BdP) began its series. This increase was mainly due to the exemption from IMT and Stamp Duty (IS) granted to young people under 35.

‘New mortgage loan contracts grew by 4.5 billion euros to 17.6 billion euros, reaching the highest value since the series began in December 2014,’ reads the statistical bulletin released this Tuesday, 4 February, by the BdP. In December alone, more than 2 billion euros were granted in new home loans.

The main contributor to this increase was ‘credit granted to borrowers under the age of 35, which accounted for 47 per cent of the amount of new permanent housing contracts granted as of August 2024 (37 per cent between January and July 2024)’. And growth in this segment was ‘boosted’ by the entry into force of the exemption from IMT and IS on the purchase of the first home by young people up to the age of 35.

Interest on home loans falls to 3.20 per cent - mixed rate grows

The reduction in interest rates has also helped attract more families to buy a house with bank finance. ‘The average interest rate on new home loans fell from 4.19 per cent in December 2023 to 3.20 per cent in December 2024, a reduction of 0.99 p.p. [percentage points]. This rate fell for the 14th month in a row,’ said the BdP.

It should be noted that new home loan operations include completely new contracts and renegotiated contracts. ‘In 2024, the average interest rates on new and renegotiated mortgage loan contracts had a similar evolution, ending the year at 3.11 per cent and 3.60 per cent, respectively,’ it explains. 

The average interest rate in Portugal on new home loans was therefore below the average rate in the euro area as a whole (which stood at 3.35 per cent, after falling by 0.65 p.p.). In the European context, ‘Portugal had the seventh lowest average interest rate,’ said the regulator.

As for the type of interest, it was noted that loans for the purchase of own and permanent housing contracted at mixed rates continued to rise, from 66 per cent in December 2023 to 74 per cent in December 2024. In the final month of last year, variable rate loans accounted for 20 per cent of the total and fixed rate loans for 7 per cent.

This reduction in interest was reflected in the ‘decrease’ in the average monthly mortgage instalment by 8 euros: from 422 euros in December 2023 to 414 euros in December 2024. ‘This reduction was partially offset by the effect of new home loan contracts, which, by presenting a higher average instalment than existing contracts, moderated the fall in the average monthly instalment of the home loan stock,’ explains the BdP.

Renegotiations falling and housing amortisations high

In 2024, there was a significant reduction in home loan renegotiations. In the case of amortisations, although they fell, they remained high. 

Renegotiations accounted for 29 per cent of new home loans in 2024 (much less than in 2023, 46 per cent). Thus, renegotiations in housing fell from 11.4 billion euros in 2023 to 7.3 billion euros in 2024.

On the other hand, early repayments of housing loans ‘remained high, totalling 10.2 billion euros in 2024, 0.4 billion euros less than in 2023,’ says the BdP. And total amortisations accounted for 87% of early amortisations in 2024. It should be noted that the exemption from the commission on the repayment of variable rate mortgages was in force until the end of last year and will continue in 2025.

Source: idealista/news
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