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Bank of Portugal alleviates stress rate on housing loans in September.

The additional shock considered by banks in calculating the household effort rate will increase from 3% to 1.5%.

The Bank of Portugal (BdP) decided to ease the stress levels of new housing loans contracted at mixed and variable rates. The extra shock, considered in the calculation of the effort rate and which simulates the financial capacity of families to face a hypothetical rise in the Euribor, will increase from 3% to 1.5%, at the end of September.

In addition to mortgage credit, this measure also covers the consumer segment, reducing stress in all maturities by half. Thus, a shock of 50 basis points (0.5%) will be applied to loans with a maturity of up to five years, while for loans between five and ten years, the rate to be tested will be 100 basis points (1%). . In the case of loans contracted for more than ten years - as is usual for the purchase of a house - they will be worth 150 basis points (1.5%).

With this measure, it is expected that more families will have access to loans to buy a house, without compromising, however, the necessary prudence with regard to the risk of default - something that should not suffer significant variations, according to the forecast of the regulator . Regarding the repercussion of the new stress rates on the granting of credit, estimates point to a recovery of the levels recorded at the start of 2023.

When granting credit, financial institutions must take into account certain criteria. Among them, the effort rate, which reflects the weight of benefits in the net income of a household and which, since 2018, cannot exceed 50%.

Currently, for the calculation of debt service-to-income (DSTI) - the more technical term -, banks consider the interest rate in force at the time of granting the loan and add 3% to simulate the ability of individuals to pay to the installment, in an adverse scenario of rising interest rates. This means that, with the Euribor currently hovering around 4%, applying this additional shock implies considering interest rates above 7% - levels that specialists do not expect to be reached.

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Source: Dinheiro Vivo


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