Mortgage lending grows at fastest pace since 2009

Loans for buying homes continue to grow

Household debt to banks for buying homes increased again in July. According to data from the Bank of Portugal (BdP), the mortgage lending stock reached €118 billion, setting a new all-time high. In a single month, the loan portfolio increased by around €1.2 billion. This is the largest monthly increase since December 2009, highlighting the continued strong momentum in the mortgage lending market.
The increase comes amid strong demand for financing, following a period in which interest rates put pressure on household budgets and encouraged many borrowers to make early repayments on their loans.

Public guarantee influences demand among young buyers

Demand for mortgage lending has also been supported by access to the public guarantee scheme for young buyers. The mechanism came into force at the beginning of 2025 and aims to facilitate financing for the purchase of a first permanent home, subject to the applicable conditions. The programme initially had a €1.2 billion allocation, which was later increased to €2.3 billion. The measure has helped boost demand for financing among younger buyers.
At the same time, changes to lending rules may have prompted some households to bring forward their financing applications before the new conditions came into force.

Lower interest rates reduce early repayments

The evolution of mortgage lending is also linked to changes in interest rates. After the high levels recorded in recent years, lower borrowing costs have made early loan repayments less attractive.
In 2023 and 2024, many households chose to reduce their debt as repayments increased. With a less pressured interest-rate environment, this trend has weakened, contributing to the growth in total outstanding debt.

Lending to households and businesses also rises

The increase was not limited to mortgage lending. Total loans granted to individuals, including housing and consumer finance, reached €153.5 billion in July.
Business lending also recorded positive growth. The stock of loans to companies increased by €438 million compared with the end of June, also reflecting greater use of bank financing.
The data therefore show that mortgage lending continues to gain ground and reach new highs in a market marked by significant demand for financing to buy homes.

Source: SUPERCASA