Interest on housing credit accelerated to 3.135 % in July

A implicit interest rate on all housing credit agreements rose to 3.135 % in july, translating an increase of 3.4 basis points (p.b.) compared to the previous month, released the National Institute of Statistics (INE) this Thursday.

The figure recorded in July (3,135%) represents more 3.4 basis points than the 3,101% of June.

In the contracts concluded in the last three months, the interest rate rose from 2.853% in June to 2.910% in July.

Only for ‘acquisition of housing’, the most relevant of housing credit, the interest rate of total contracts rose to 3.125% and in contracts of the last three months increased to 2.902%.

In July, the average benefit was EUR 414, EUR 3 above June and EUR 20 more than in July 2025. The interest ratio represented 49.5% of the average benefit (EUR 205) and the remainder was interest payment (EUR 209).

In the last three months, the average value of the benefit has risen by 16 euros on an annual basis to EUR 731.

The average outstanding capital for all housing credits increased by EUR 598 to EUR 79,463.

In the last three months’ contracts, the average amount outstanding was EUR 182.446, plus EUR 2,894 than in June.

New rules for stress rate in housing credit

The new guidelines of Banco de Portugal (BdP) for the granting of housing credit are already in place, providing for more stringent rules regarding the application of the effort rate for the approval of loans.

The new recommendation replaces a previous one, of 1 July 2018, establishing as a rule that banks should only approve a credit if the effort rate of all customer loans does not exceed 45% of the monthly net income, when, until now, the percentage was 50%.

 
 
The 45% corresponds to the maximum share of income that a private person or household can allocate to the payment of the loan, in an effort scenario where interest rates increase by 1.5 percentage points.

The limit shall be calculated taking into account all the responsibilities of a customer, including the provision of the various loans that a customer has assumed.

In certain cases, banks may approve a credit with a higher stress rate, and the exceptions may not go up to 10% of the total amount of credits granted over a six-month period, according to the recommendation.

By allowing exceptions, the central bank says that it intends to “preserve some flexibility” in the application of that limit, for financial entities to take into account “other risk mitigants that are justifiedly relevant for the assessment of the solvency of borrowers”, reads in the text of the recommendation.

The BdP explains that the change in the effort rate aims to “contain the increase in household indebtedness” and “increase prudence in assessing borrowers’ financial capacity to meet obligations”.

In addition to this change, the BdP also reviewed the guidelines for the maximum period for payment of benefits, which continues to vary depending on the age of the debtor, but only with two steps instead of three.

Customers up to the age of 35 may apply for a loan with a maximum maturity of 40 years, and those over 35 years of age may pay the benefits within 35 years.

Until now, there were three echelons, with a maximum maturity of 40 years for young people up to 30 years, a maturity of 37 years for the age group above 30 and up to 35 years, and another one of 35 years for the age group above 35 years.

The BdP continues to recommend that banks do not grant loans to housing for the purchase, construction or construction of works in own and permanent housing exceeding 90% of the value of the property and 80% in the case of housing credits for other purposes.

The recommendation removes the rule allowing banks to lend 100% when the purchase of a property owned by the bank itself was concerned.

The central bank led by Álvaro Santos Pereira decided to leave out of the scope of the recommendation the financial leasing of real estate contracts (“leasing” real estate), only keeping within its perimeter the financial leasing of movable goods (such as automobiles).

The new guidelines also cover consumer credit agreements.

For this universe, the recommendation provides that the maximum period of each new personal credit agreement shall not exceed seven years.

In the case of personal credits granted for education, health and energy transition purposes, maturity may be up to ten years.

The same 10-year term shall apply in motor vehicle credit agreements.

The new rules apply to processes in which the solvency assessment of bank customers takes place from today.

The guidelines should be followed by all banks, which must “ensure that they have the appropriate means and processes” to implement the recommendation and apply “apply appropriate risk management criteria for all credit operations”.

The limits set out in the Recommendation “correspond to maximum values, which do not replace the obligation for institutions to assess the adequacy of the values of the different indicators and other relevant criteria used in the solvency assessment” of each customer.

[News updated at 11:17 a.m.]