New consumer credit hit 2023 highs since the series began in 2012, and in February banks had lent 21.3 billion euros in consumer credit, according to data from the Bank of Portugal.
The stock of 23.3 billion euros that banks had lent out in consumer credit in February was 0.25% more than in January and 3.8% more than in February 2023.
The ‘stock’ refers to new credit granted and old credit whose contracts are still ‘live’.
As for new consumer loans, the latest figures are for January. In the first month of the year, the amount granted rose 9.5% year-on-year to 652 million euros.
Of this amount, 237 million euros went to buying cars, 288 million euros to other personal loans (with no specific purpose), 114 million euros to credit cards, credit lines and overdraft facilities and 12.9 million euros to personal loans for education, health, renewable energies and others.
In 2023, banks had lent 7,654 million euros in consumer credit, the highest figure since the series began (2012).
Consumer credit is regulated, including the maximum rates that financial institutions can charge. The law establishes that the maximum rates are equivalent to the average Annual Percentage Rate (APR) charged by credit institutions in the previous quarter plus a quarter and that none may exceed the average APR by 50%.
The Bank of Portugal recently published the maximum rates for the second quarter of the year.
Between April and June, the maximum rate for credit cards, credit lines, bank current accounts and overdraft facilities rose from 18.6% to 19%. As for loans to buy new cars, the maximum rate rose from 6.1% to 6.3% in the case of leasing or ALD and fell from 11.1% to 11.0% in loans with reservation of ownership.
In the case of used vehicles, the maximum rate rises from 6.5% to 6.8% for leasing or ALD and from 14% to 14.2% for contracts with reservation of ownership and others.
As far as personal loan rates are concerned, when the purpose is education, health, renewable energy and equipment leasing, the maximum rate rises from 7.7% to 8.5% and for other personal loans (without a specific purpose, home, consolidated and other purposes) it rises from 15.2% to 15.6%.
In its report on credit released this week, the Bank of Portugal does not express any concerns about consumer credit, saying that the profile of customers who have taken out credit has improved.
In 2023, 91% of new home and consumer loans went to customers with an effort rate of less than or equal to 50%. The effort rate is the ratio between the loan installments the client pays the bank each month and their monthly income.
The average maturity of consumer credit remained stable throughout 2023. The average maturity of personal loans was around 6.5 years and the average maturity of car loans around 8.6 years.
