Total home loans increased by 4.8% in April to 98.3 billion euros compared to the same period in 2021. This is a similar increase recorded in March, the Bank of Portugal (BdP) said. After all, financial institutions gave 3.3 million euros a day only for real estate acquisition transactions, not yet reflecting the restrictions imposed by the regulator.

The Bank of Portugal introduced new restrictions on the maximum repayment period for new mortgage loans from April, depending on age.

For customers older than 35 years, the loan repayment period should not exceed 35 years. For bank customers older than 30 years and younger than 35 years, the maximum loan term should be 37 years. Loans up to 40 years old are now possible for those less than or equal to 30 years old.

However, analysts contacted by Sunrise admit that this impact is not yet noticeable. “Housing lending remains strong, but recent restrictions are not expected to have a major impact on this trend. On the other hand, these new measures may encourage young people to use home loans earlier,” says XTB’s Enrique Tome.

Nuno Garcia, CEO of GesConsult, admits that since the announcement of the restrictions we have seen a “credit rush”, which is why the maximum loan amounts were reached in March since 2007. Going forward, he believes, “these restrictions may have an impact on home buying as the time frame gets progressively shorter,” adding that “this is a situation that deserves attention, especially as we see conditions for buying a home coming later and later.” “.

an alarm sounds
The alarm is sounded not only by those who have already purchased housing, but also by those who had a mortgage loan. The explanation is simple: in recent months, the European Central Bank has shrugged off interest rate hikes, moving away from the current negative-interest-rate scenario that harms savings but benefits bank house payers.

And Christine Lagarde already admitted this week that a simple “gradual” approach to the pace of interest rate hikes may not be enough to reduce inflation risks.

The central bank’s idea is to stop buying debt in the third quarter, allowing interest rates to rise for the first time in July, and current ECB expectations are that there will be no more interest rates in the euro area by the end of the third quarter. – reference to the interest rate on deposits, which is at the level of -0.5%.

Enrique Tomé says that in Portugal the real estate market problem is mainly due to the fact that with such a large demand for real estate, there are few offers. But he acknowledges that “in the short term, higher interest rates could effectively dampen demand in the real estate market, which could lead to a slight price correction,” adding that “concerns about a possible economic downturn could also fuel this scenario of real estate price correction.”

However, the XTB analyst is optimistic and recalls that interest rates have been at their lowest for several years, believing that, despite the start of growth, this increase will be gradual and should not greatly affect families. “In fact, compared to what is happening in the US, the ECB takes a much more cautious position, but in fact there is such a possibility. We are seeing a slowdown in growth in several sectors, with the exception of the real estate sector, which remains stable.”

But he points to risks, saying that factors that could contribute to a slowdown in the sector are beginning to emerge, such as rising interest rates and medium- and long-term risks that point to a possible slowdown in economic growth.

More pessimistic is Nuno Garcia, for whom the increase in interest rates entails an increase in monthly housing costs, including monthly loan payments. “For families, this can be difficult to overcome because paying electricity, water and gas bills has often already been a problem, with an increase in the monthly loan payment, the situation worsens.”

And given this scenario, the official advises buyers to analyze the situation well and see if they can guarantee the payment of their expenses, “so that we do not repeat what happened in 2011, when loans were stopped due to payment.”

Despite these risks, the general director of GesConsult believes that now they will be less than those that were observed during the Troika. And he explains why: “Today we see more rules in home loan approval and people are more informed about the whole process. I don’t think we’re going to go through the same situation. However, you must be especially careful, no doubt. We emerge from one crisis and enter another almost instantly. It takes the ability to adapt and reflect so we don’t go through the same thing again.”

point solutions
If, on the one hand, Nuno Garcia says that the rental market can be seen as an opportunity and as a faster solution for the market, Enrique Tomé advises those who are preparing to buy a house in the coming months to negotiate good prices in order not to pay an excessive amount for an excessive overpriced and speculative real estate.

In an interview with i newspaper, Natalia Nunez, who is in charge of the Deco Financial Protection Authority, has already acknowledged that the decision to raise interest rates will inevitably affect those with mortgages and that it could get new contours for consumers who are at the limit of payments on mortgage loans. your expenses.

In this regard, we must now count on rising prices for fuel, energy, food, transport, etc., as well as on rising inflation. “This is a concern that we have had since the beginning of the year. We have warned consumers to consider the household budget in case they are faced with a change in interest rates, as this may have some impact on the amount of the payment due to the bank at the end of the month.”

An even bigger headache for those who, according to the person in charge, already have a high rate of effort. “It’s not just a question of raising the interest rate, it’s all that we already feel every day, it’s the rise in prices, what’s been happening since the beginning of the year. Most families reach the end of the month and end up spending much more than before, and their income has not kept pace with the increase in these expenses,” says Natalia Nunez.