The 2024 credit markets monitoring report, published today by the Bank of Portugal, indicates that last year, new mortgage contracts signed with a mixed rate—combining a fixed rate for a certain period followed by a variable rate—accounted for 82% of new agreements, compared to 45% in 2023.
At a time when interest rates remain “relatively” high but are declining, banking institutions recorded an “increase in demand and contracting of mixed rates in housing loans,” says the central bank, noting that this trend “was accompanied by the marketing of more mortgage products with this type of interest rate.”
The proportion of fixed-rate and variable-rate housing loan contracts decreased significantly, representing only 6.4% and 11.6% of new contracts, respectively.
Nevertheless, most contracts in banks’ portfolios at the end of 2024 continued to have variable rates. This category covered 74.7% of the 1.32 million existing contracts and 60.9% of the 101.7 billion euros in bank customers’ debt.
Contracts signed with a mixed rate accounted for only 22% of the contracts in the portfolio and 34.4% of the outstanding balance. Fixed-rate contracts represented 3.3% of the cases and 4.7% of the amount owed to banks.
For contracts with variable rates indexed to the three, six, and 12-month Euribor, the average spread of new contracts was 0.89 percentage points, compared to 0.93 points in 2023, according to the central bank’s report.
In the mortgage segment, the main sector of the banking market, 125,400 new contracts were signed in 2024, a 26.6% increase over 2023, and “about 17.9 billion euros in initial credit” was granted, up 32% from the previous year.
Monthly, banks granted an average of 1,491.7 million euros, a 32% increase compared to 2023.
On average, 10,447 mortgage contracts were signed per month, a 26.6% increase compared to the previous year. There was an increase in both the number of new contracts and the initial amount of credit granted in all quarters.
The term of mortgage contracts signed over the past year was 30.6 years, “a value similar to that observed in 2023.”
Simultaneously, the average term of contracts in Portugal was 33.5 years, remaining stable compared to 2023 (33.7 years).
The credit markets monitoring report is published annually by the Bank of Portugal to describe the evolution of mortgage and consumer credit granting by commercial banks in Portugal.
The consumer loan segment grew last year, after slowing in 2023.
The amount of credit granted rose 10%, “approaching the level observed in 2021 (11.6%) and 2022 (15.6%) and significantly above 2023 (0.8%).” The number of contracts signed “increased by 5% in 2024, compared to a growth of 1.9% in 2023,” the BdP reports.
