By Andrea Hargraves 
The Bank of Portugal (BdP) announced on Monday that it has issued new macro-prudential recommendations on housing loans, which are supposed to come into effect from April 1 this year. This time around, Mário Centeno’s team has specified that new home-buying loans will have a maximum maturity of 40 years for bank customers aged 30 years or younger, while contracts with clients between 30 and 35 years will have a maximum maturity of 37 years. . For borrowers over 35 years old, the maximum maturity for bank financing drops to 35 years.
“In light of the convergence of the average maturity of new 30-year mortgage loan contracts to the end of 2022, Banco de Portugal, in its capacity as the macroprudential authority and through Board deliberations on January 25, 2022, recommends new limits to the maximum. To accrue for new housing credit operations according to the age of the borrowers”, It reads in a statement from the banking regulator.
These are recommendations that must be adhered to, as banks that do not respect the established limits will have to explain themselves to the BDB, according to the same statement. For families looking for a mortgage to buy a home, the age of the oldest member of the family will be calculated.
The decision now comes because the BDP recognizes that “the average maturity of new home loans has not converged, linearly and gradually, to 30 years.”
At the end of 2021, the average maturity period was 32.5 years. Now, banks will have to look to reduce it to 30 years by the end of 2022.
“Banco de Portugal, as a macroprudential body, will continue to monitor compliance with the recommendation and may adopt additional measures it deems appropriate to achieve the goal of converging the average maturity of new 30-year mortgage loan contracts by the end of 2022,” BdP pushes.