Household loans racking up despite Bank of Portugal’s discouragement
Despite the strict rules the BdP has designed for credit concession, aimed at reducing it by large, the Portuguese banking system has continued lending as consumption keeps going up.
Consumption keeps rising, with credit concession accompanying the increasing trend as banks continue to give families money loans. After seven years of retraction, there has been much recovery in the economy this year, with the market gaining momentum.
The share of loans for households and non-financial corporations has hit a new record in July, although there had been recommendations against it coming from the Portuguese central bank, who had warned against easing credit concession.
According to the statistics released on the ECB’s website this Tuesday, the total of household loans weighing down on Portuguese families was about €116.2 bn in July, which is the highest value reached since April 2016. It enhances a remarkable recovery the economy is having this last year, especially if compared to the discouraging values that followed the financial crisis and had hit household loans, which had been falling continuously since 2011.
Over the course of the first semester of the year, loans’ stocks in the segment have been improving, which shows that new credit being conceded by banks to consumers is enough to compensate the loans that expired.
ECB’s statistical report shows that last month’s increase accounted for a €107m difference, and if compared with the beginning of the year, the stock of loans conceded is up by €440m.
Credit for consumption on the rise
The majority share of credit is related to loans for house purchases is the highest by far (80%), which doesn’t mean that the consumption levels on retail and the acquisition of goods and services haven’t been increasing as well. They have indeed, as families have now reached the maximum spending value in credit for consumption since 2012 (€14.7bn).
Over the last nine months the balance of loans for consumption of goods and services increased, in what seems to be a bet for Portuguese banks in general: according to the BdP, the Portuguese were asking the banking system for around €20 million euros a day in this type of loan.
In regards to house purchase loans, the stock hit €93.8 billion after it had gone up in about €28 million last month.
