Banco de Portugal sets the deadline for home loans according to the age of the customer
For a convergence of the maturity of the maturity up to the average of the contracts of 20 housing contracts, Banco de Portugal announced 2 of the maximum duration of the new housing limit operations according to the age of the final borrowers.
The measure takes effect on April 1 and April banks will take into account the new ones released. “The maximum of credits must be 40 years, for borrowers aged less than or equal to 30 years”. A “37-year term for borrowers over the age of 30 and less than or equal to 35 years, and a maturity of 35 years for borrowers over the age of 35”.
In December 2021, the average was at 32.6 years. To accelerate the convergence towards 30 years of maturity, Banco de Portugal introduced new benchmarks.
2018 restrictions in terms of supply to the consumer market, due to the need to avoid restrictions on the availability market and the need to avoid restrictions on the available market. In fact, these measures also serve to prevent banks from needing more capital due to deviations in these business segments.
At that time, the supervisor determined several, including the 40-year term for an average convergence of 30 years in the new housing credit contracts, which now adjusts to the age of the customers.
A measure that arises because in 2021 there was a deviation in this convergence. In the third quarter of 2021, 48.9% of contract credit operations were contracted between one-quarter and 40-year concession contracts. This does not point to a convergence01 determined in July 28, the 30-year maturity in average terms.
In that were other indicators: the value of the measure must be equal to the evaluation of the house and the value of height, recommended as rate of effort, as well as the disposable income (50%) to avoid that the fall in height income is a risk for the banks.
Measures that had the impact of mortgage loans, banks in the banking system and that did not work with the impact of the task of explaining to the supervisor.
In December 019, financing for home purchase was still at 94% of the property value, but today it is below 90%.
As Banco de Portugal has had, according to some studies by the supervisor itself, a positive impact since 2018 as far as default is concerned. This rate was important for the bank to be smaller.