Financial companies can offer mortgages with state guarantee  

Financial companies can grant housing loans to young people with a public guarantee as of this Thursday, according to a decree-law published in the Diário da República on Wednesday.

In the preamble to the decree-law, published today, the government said that it had taken the step of extending to financial companies the regime of the State’s public guarantee on housing loans for people up to the age of 35 after verifying the “strong interest” of citizens in the measure and the “significant adherence already expressed and materialised by credit institutions”.

Until now, only credit institutions could grant housing loans to young people with a state guarantee.

“The greater scope that is intended to be given to the application of the state guarantee is also aimed at establishing equal access to other entities in the financial sector,” said the government, which believes that this also promotes “competition in the market”.

The decree-law published today comes into force this Thursday.

Last week, the Ministry of Finance said that extending the public guarantee to financial companies would not increase the 1.2 billion-euro of the guarantee already authorised.

According to Miranda Sarmento’s office, the public guarantee decree-law “has only been amended to allow financial companies authorised to grant mortgage loans in Portugal to also benefit from this government measure, under the same conditions as apply to credit institutions”.

“There are no changes to other substantive aspects of the regime,” he emphasised.

When it approved the public guarantee on housing loans granted to people up to the age of 35, the government considered that the measure would make it easier for young people to access the housing market.

The state’s guarantee can amount to up to 15% of the outstanding capital initially contracted to obtain 100% financing of the transaction’s value.

The guarantee is valid for 10 years from the date the credit agreement is signed.

During the presentation of their 2024 accounts, the main banks operating in Portugal said that they already have thousands of applications and loans under contract under this scheme.

The public bank Caixa Geral de Depósitos (CGD) said on 27 February that it had received 3,376 applications for mortgage loans with a public guarantee worth 623 million euros. Of these, 861 were contracted or were in the final stages of contracting, totalling 160 million euros.