“As part of the public guarantee for youth housing, we received over 9,100 applications, amounting to approximately 1.7 billion euros in proposals submitted, and we have already formalized almost 500 million euros,” stated Pedro Castro e Almeida, the CEO of the bank, during the presentation of the bank’s first-half results in Lisbon.
The bank noted that loans with a state guarantee showed an LTV [loan-to-value] ratio of 99.5%. This indicator represents the relationship between the total credit amount for a property and the lower value between the appraisal or purchase price.
Board member Miguel Belo de Carvalho explained that the bank had already used about 30% of the available amount and has no rush to exhaust the ‘ceiling’, but Santander Totta remains ready if the Government decides to extend the program either in time or amount.
The public guarantee for housing loans to young people up to 35 years old (inclusive) applies to contracts signed until the end of 2026, allowing the State to guarantee, as a guarantor, up to 15% of the transaction value.
The quota assigned to Santander of the amount guaranteed by the State is 259 million euros, making it the bank with the largest share of this program. In a situation where the bank would finance all transactions, it represents a credit limit slightly above 1.7 billion euros.
Pedro Castro e Almeida emphasized that the proportion of housing credit contracts at Santander Totta is nearing 20% and that in the past 12 months, the bank financed home purchases for 37,000 families.
Regarding the sector, the CEO pointed out a mismatch between supply and demand, noting that this is not only an issue in Portugal, but the government’s plan to reduce bureaucracy is part of a set of good intentions by the executive, whose execution “will be critical.”
The CEO remarked that there is “a short sheet to cover many problems,” suggesting that reducing local accommodation availability might impact tourism, but increasing it could drive people out of cities like Lisbon or Porto.
Discussing the public guarantee, Pedro Castro e Almeida reiterated the metaphor of the short sheet, acknowledging that while it may increase demand, it also enables home purchases for “a segment of young clients who wouldn’t have the opportunity to buy homes otherwise.”
“But if house prices continue to rise, soon more measures will be needed, because there are other young people now who also cannot buy,” he added.
Miguel Belo de Carvalho clarified that since the public guarantee came into effect, housing credit production among clients up to 35 years old grew 15 percentage points, reaching 45%.
