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Portugal's mortgage rates at historic lows

4805The nation’s borrowers racked up €819 million in loans in just one month - December 2017, "the highest amount since December 2010," announced the Bank of Portugal today.
 
According to the central bank, new consumer loans amounted to €401 million and personal loans for ‘other purposes’ accounted for €183 million.
 
Loans to companies, a figure watched keenly by government to see if Portugal’s banks are actually lending to the business sector, averaged €2.404 billion a month in 2017, "which represents a decrease of €83 million compared to 2016", says the central bank.
 
"In 2017, interest rates on new lending operations continued to show a downward trend, reaching new historical lows in several segments," reads the scintillating Bank of Portugal report.
 
Banks have reacted to interest rate lows by jacking up thee maintenance fees for running personal accounts. This ruse has relived Portugal’s bank account holders of €5 million a day in the past year.
 
The average interest rate on new loans to companies dropped to 2.16%, "a new historical low," and the average interest rate on housing loans declined to 1.57%. This downward trend also affected consumer credit and ‘loans for other things’, with average interest rates falling to 6.88% and 3.26%, respectively.
 
At the start of February this year, the Bank of Portugal announced that Portugal’s lenders have been advancing far too much money to the nation’s borrowers and is to impose restrictions to limit mortgages and personal credit advances.
 
Loan-to-value limits for property lending will be capped at 90% of banks’ valuations and the 40-year mortgage is going, with a new limit of 30 years to be insisted on.
 
The Bank of Portugal is well aware of last year’s €13 billion splurge on property lending as the market roared ahead after years of stagnation. It now is concerned that borrowers are over-extending their finances to afford a roof over their heads.
 
At the beginning of December, 2017, the Bank of Portugal reported in the Financial Stability Report that a tightening of the evaluation criteria by the banks, when granting credit, was needed given the evolving risks to the financial system.