The significant increase in the cost of loans for families has raised fears of an increase in defaults. However, the data shows that non-performing loans (NPL) ratio is stable, remaining at historically low levels.

In the first four months of the year, €10.4 billion in new loans were granted to families, according to figures released by the Bank of Portugal. This value represents growth of over 17 per cent compared to last year and puts the volume of new financing at the highest level since 2003.

Unsurprisingly, the lion’s share of financing is for housing. Over the four months, almost €7.5 billion were financed in new operations, which represents an increase of 16 per cent compared to 2023 and corresponds to the best first four months since 2003.

It should be emphasised that these new operations include the credit transfers that many families decided to make, finding more attractive financing solutions at different banks. This in a period still marked by the impact of the sharp rise in interest rates seen throughout 2023.

Consumer credit, on the other hand, absorbed almost €2 billion in the first four months of the year, which represents a 10 per cent increase on last year.

It’s important to emphasise that throughout these months, the amount financed has fluctuated slightly, increasing and decreasing, with no consistent trend over the months.

In terms of housing loans, only 0.3 per cent of the total volume of loans granted is overdue, thus remaining at historically low levels. Only in February and March of this year did this ratio reach 0.2 per cent, a level it had never reached before. In April it rose slightly.

In total, there are 260.2 million euros in nonperforming home loans within the Portuguese banking system, a figure that represents a slight rise, but which keeps the level of household defaults at historic lows.

In the consumer credit and other purposes segment, defaults correspond to 2.7 per cent of the total financing granted, which also represents a slight increase compared to March (2.6 per cent),but corresponds to a low level considering the data since 2003.

Original Story: Doutor Finanças | Author: Sara Antunes
Translation and edition: Prime Yield