In recent years, the Portuguese have seen the house installment decrease. And in 2019 how will it be? Will the monthly payment to the bank for mortgage loans go up for good? Those who have already applied for funding should see the benefit rise, especially in the case of the 12-month Euribor rate, which could be on positive ground this year. And those who are thinking of “going into debt” will have less favorable conditions than in 2018.
The downward lending scenario is largely due to the stimulus policy of the European Central Bank (ECB), which has set - and kept - the key interest rate in the Eurozone at historic lows (at 0% since March 2016). The consequence was the fall in Euribor rates, the main index of mortgage loans in Portugal, which are on negative ground, although they have already started to rise.
According to Juan Villén, director of idealistic mortgages, those who have already borrowed money from the bank to buy a house should see the loan increase, namely within six months, the most used in Portugal: “The rise in Euribor will affect those who opted for the variable rate, but the largest increase is expected to occur in Euribor at 12 months, as shorter maturities usually rise more slowly than long ones. In the case of six-month Euribor, the impact will be reduced by a few euros ”.
Noting that it is “very difficult to predict the exact evolution” of Euribor rates, the official anticipates that the 12-month Euribor will enter “on positive ground in the first half of 2019”. However, it should remain below 1% over the next two years. "We anticipate that the increase in benefits will not be radical, so it can be supported without much problem by families," he adds.
What to expect from new housing loans?
Already thinking of buying a house in 2019 with the "help" of the bank will have conditions "probably worse" than last year, "fundamentally for two reasons," Juan Villén perspective.
"Firstly, Banco de Portugal (BdP) is more demanding with banks as regards monitoring the application of prudent risk analysis criteria, seeking to ensure the solvency of applicants and, for example, by reducing the maximum maturity of financing, from 40 to 30. Secondly, the rise of Euribor, which began in 2018, will continue this year, which will entail a higher interest rate, "explains the director of idealistic mortgages.
According to Villén, the fact that banks are also betting - on new mortgage loans - on 12-month Euribor will mean that, in a scenario of rising interest rates, the repayments to the bank may also rise faster than in the case of a period of six months. "This will be especially noticeable in fixed-term and long-term loans (30 years). The combination of these two variables (coupled with rising house prices) will increase the provision, making housing inaccessible to many people while others will tend to conform to the idea of buying a lower quality home or in more accessible areas, "he concludes.