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New Bank Lending Rules – July 2018

As of Sunday 1st July, the Bank of Portugal’s new lending restrictions came into force, meaning that those applying for new bank loans for either consumer purchases or mortgages can only spend a maximum of half of their monthly income on bank-based repayments.  By doing this, the bank hopes to ensure that other banks do not take unnecessary risks or that individuals do not overextend themselves and fall into debt.  This is especially pertinent as the bank recently admitted there were signs, albeit small, of property overvaluation.

The new changes are:-

New customers applying for loans can only spend a maximum of 50% of their monthly income on loan, credit card and mortgage repayments.

When accessing eligibility for loan repayments banks must estimate a 3% interest rate increase in their calculations

Only 90% mortgages are available, except when properties have been purchased directly from the bank when 100% financing may be available.

Maximum 40-year repayment duration for mortgages.

Ten year maximum on consumer loans.

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