The Bank of Portugal (BdP) recommends that banks properly implement the public guarantee for mortgage loans for young people to ensure that it does not threaten the solvency of clients or the stability of banking.
This Thursday, the BdP put the draft call for a personal guarantee from the State for housing credit to young people up to 35 years old to public consultation, until November 29.
According to the note that justifies the public consultation, the draft call aims to “establish the requirements that credit institutions adhering to the protocol before the General Directorate of the Treasury and Finance must comply with the dissemination of information on the State’s personal guarantee regime.
The document says that banks that adhere to the public guarantee must adopt, “as quickly as possible, the necessary measures to comply” with their information obligations to clients.
For the banking regulator and supervisor, information to clients is “necessary for adequate implementation of the State’s personal guarantee regime, which does not put the solvency of clients at risk or compromise financial stability.”
The public guarantee that the State will provide for young people to access housing credit should be operational by the end of the year (banks must adhere to the regime and then have two months to implement it) and will be valid for contracts signed until December 31, 2026.
The public guarantee for housing credit for the first home of young people between 18 and 35 years old will allow the State to guarantee, as guarantor, up to 15% of the value of the transaction, covering purchases of up to 450 thousand euros and for young people who do not obtain higher incomes. to those in the eighth income bracket of the IRS (81,199 euros of annual taxable income).
Since the Government presented this measure, the Bank of Portugal has publicly warned, on several occasions, that banks cannot facilitate compliance with the rules for granting this credit, not even with a public guarantee.
The governor, Mário Centeno (former Minister of Finance of the PS), explained that the The Bank of Portugal is always in favor of measures that help the younger population access housing, but “prudence” is necessary. On the one hand, he said, to guarantee the stability of the financial sector and, on the other, to ensure that clients have the ability to pay debt.
The macroprudential regulations currently in force determine that the credit cannot exceed 90% of the value of the home (considered, for these purposes, the lowest value between the acquisition value and the appraisal value) of own and permanent housing. They also indicate that, as a general rule, a client should not spend more than 50% of their income on transferring the house to the bank (the so-called effort rate).
Source: Observadora
