The Bank of Portugal will ease the recommendation of the stress test applied to home loans, facilitating access to credit, according to information to which Lusa had access.
Thus, the simulated interest increase will go from 3% to 1.5%.
This change has already been approved by the Bank of Portugal’s Board of Directors, but it still needs to be put out for public consultation (which will happen next week for 30 working days) before it comes into force in late summer or early fall.
In early July, the deputy governor, Clara Raposo, had already said publicly that Banco de Portugal was considering changing this recommendation, which had been in place since 2018 (when interest rates were in negative values). Subsequently, the Portuguese Banking Association (APB) came out in favor.
When a customer wants to take out a mortgage loan, the bank simulates what the customer’s effort rate would be if the current Euribor rate were to rise by another 3%, and in this stress test the customer should not spend more than 50% of his income on the monthly credit installment.
Currently, with the 12-month Euribor rate (the most commonly used for home loans) at 4%, the stress test puts the simulated interest rate at 7%, a figure that would mean a great effort and may prevent customers from accessing new credit to buy a home.
According to information to which Lusa had access, Banco de Portugal considers that with the current levels of interest rates it is not justified to simulate such a considerable increase. In addition, the banking regulator and supervisor considers that changing the recommendation will allow more families to access credit without compromising the prudence that banks should have in granting loans.
Sources in the banking sector contacted by Lusa consider that it is the lack of income of customers – especially low wages – in the face of high house prices that is the biggest impediment to accessing housing loans.
The measure already approved by the Board of Directors of Banco de Portugal also applies to consumer credit. The 2018 recommendation states that in credits up to five years the interest rate plus 1% should be simulated and in credit between five and ten years add to the interest rate plus 2%, having approved the regulator and banking supervisor to halve these values (0.5% and 1%, respectively).
Last June, banks lent €1.524 billion in housing loans (the average interest rate on loans for permanent housing at a variable rate reached 4.37%), 8.7% less than the €1.402 billion in the same month of 2022 (when the average interest rate was 1.47%).