Mortgage loans in Portugal jump to record amid fall in interest rates and tax exemption for young
Young people up to the age of 35 were the main contributors to the increase in demand for home loans, which rose to 17.6 billion euros last year.
Portuguese banks granted 17.6 billion euros in new real estate loans in 2024, a new record, with the sharp fall in interest rates and the exemption from payment of the Municipal Tax on Onerous Transfers of Real Estate (IMT) and the stamp duty for young people boosting demand.
“New mortgage credit contracts grew by 4.5 billion euros, to 17.6 billion euros, reaching the highest value since the beginning of the series, in December 2014”, points out the Bank of Portugal, in a statement released this Tuesday.
The institution led by Mário Centeno says that the increase in loans for home purchases was mainly due to greater demand from borrowers under 35, who represented 47% of new contracts.
The demand for real estate credit was also driven by the drop in the average interest rate, which fell from 4.19% in December 2023 to 3.20% in December 2024, decreasing for the 14th consecutive month.
The numbers also increased in consumption loan, that grew 12.3% to 6.4 billion, and even more in “other purposes”, where the increase was 47% to 2.5 million euros.
Unlike real estate credit, in consumption the average interest rate on new operations did not fall in 2024, remaining unchanged at 8.5%. In loans for other purposes it fell to 3.92%. In total, financing for individuals reached 26.5 billion euros in 2024, which represents a 29% jump compared to the previous 12 months.
The past year was also marked by a sharp reduction in credit renegotiations (-53.8%) to 7.8 billion, mainly explained by the decrease in real estate credit. Early repayments of real estate credit remained high, totaling 10.2 billion euros in 2024, 400 million euros less than in 2023.
Credit to companies also grew, with the amount of new contracts increasing by 12.8% to 22.9 billion euros in 2024, mainly due to the positive evolution recorded in financing of up to 1 million euros.