Lending constraints provoke mortgage falloff
Mortgage lending is now feeling the pinch from new regulations imposed on banks by the Portuguese central bank Banco de Portugal.
The regulations are designed to control the terms under which Portuguese banks and other credit agencies can lend money for home loans.
In September, the number of new home loans fell for the third consecutive month despite like-for-like maintaining an upward trend on last year.
Data released by the Bank of Portugal this Tuesday show that Portugal’s banks lend out €790 million in home loans for September.
When compared to the same month last year, the amount of new credit concession displayed a rising trend. More specifically by 6.9% on the €739 million registered in September of last year.
However, in monthly terms, there was a reduction in new home loan credit concession by €20 million when compared to the €810 million registered in August, signalling the third consecutive month of falls.
Furthermore, traditionally September sees an increase in mortgage lending following the summer holiday period with the exception of the crisis years between 2010 and 2013.
The overall fall could be a sign that the Bank of Portugal’s recommendations are being taken seriously by the nation’s banks which are implementing some limits on potential mortgagees.
The limits are also being felt in consumer lending after the new rules came into force at the start of July this year.