NPLs could reach €1.32Bn says Deco
The end of the moratoria on household loans to Portuguese families could lead to credit default of up to €1.32Bn.
This is according to consumer watchdog organisation Deco Protest whose economist Nuno Rico told Jornal Económico that when grace periods end in September on loans and mortgages, 5% of borrowers in Europe (including Portugal) may not be able to begin repaying their loans.
But in Portugal that percentage has been calculated to be even higher at between 8% to 10% of loans under moratoria (a total of €13.2Bn), most of it mortgages.
In addition to job precariousness, the lockdowns that undermined key sectors of the Portuguese economy like tourism, and the excessive chunk of monthly mortgage repayments compared to Portugal’s low average pay cheques, borrowers also have to contend with interest rates charged by the banks throughout the pandemic period covered by the moratoria, unlike all the other countries in the European Union.
“What is certain is that the average percentage of families in the EU who will manage to reschedule their debts is thought to be 20%, while the percentage of those who default on their loans is 5%. In the case of Portugal, the end of grace periods on loans is likely to be even more dramatic,” says economist Nuno Rico.