Homeownership benefits in Portugal can skyrocket up to 30%

The cycle of interest rate hikes to try to contain record inflation in the European Union could represent a ticking time bomb for families in Portugal, where more than 90% of home loan contracts were signed at variable rates.

The skyrocketing value of mortgage payments has already begun, and the scenario is particularly more complicated for those who have recent contracts with higher amounts. In some cases, the readjustment for the next 12 months can exceed 30%.

The main variable in the calculation of installments is the so-called Euribor, the interbank reference rate in the EU that serves as a parameter for most housing financing. Values ​​are often closely related to ECB (European Central Bank) interest rates.

As a form of stimulus after the financial crisis of the last decade, Euribor was at negative levels between 2015 and 2021. With the high inflation scenario in Europe, the rate rose again in 2022.
The main reference for contract adjustment, the 12-month Euribor is already above 2.4%.

For a family that has taken out a loan of 150 thousand euros (about R$ 756.7 thousand) with a term of 30 years, an interest rate associated with 12-month Euribor and a bank spread (institution’s profit margin) of 1 %, the installment can be increased by more than 120 euros per month (R$ 605).

“We spent seven years with negative interest rates, we had a period of exception. Now there is a normalization of interest rates. The problem is that this happens very quickly and at a time of high inflation [quase de 10%] and a general increase in the cost of living”, says economist Nuno Rico, from Deco Proteste, a consumer protection association.

In the opinion of the professional, although the situation is cause for apprehension, the Portuguese economy is now in a better position to deal with the changes.

“We are in a better situation globally than in the period 2011 and 2013, when we had a crisis and the troika intervened. [FMI, BCE e Comissão Europeia] in the country. Now the situation seems less serious, we have no sign of an increase in unemployment”, he adds.

In Portugal for six years, Kelly and Robson Oliveira, both from Minas Gerais, financed a one-bedroom apartment in Sintra, in the Lisbon metropolitan region, in December 2021. The couple says they are apprehensive about the first readjustment of the installment, on their anniversary. one year of the contract.

“Life has become a lot more expensive in recent months: supermarket, electricity and gas bills. It just hasn’t increased our salary. If the house payment increases as much as people are saying, I don’t know how we’re going to fit in the expenses”, says Kelly. , who earns around 1,000 euros (R$ 5,040) as a beautician.

In recent months, with the scenario of rising interest rates, the concern with a general increase in housing benefits has been seriously discussed in Portugal.
This Monday (10), the government of Socialist Prime Minister António Costa announced some measures to support families with housing credit.

In the proposed State Budget for 2022, now delivered to Parliament, there will be a reduction in the income tax withheld at source for those who have housing financing “for their own and permanent housing” and earn up to 2,700 euros (R$ 13,600) gross per month.

It is estimated that around 1.4 million holders of credit agreements can benefit from the measure, whose main objective is to increase the liquidity of the Portuguese.

While countries with stronger economies, such as France and Germany, tend to have mortgage loans at pre-defined rates for the entire duration of the contract or over several years, the situation is different in Southern Europe.

Data from the Bank of Portugal indicate that around 93% of housing credit in the country has variable rates. In neighboring Spain, it is around 75%.

“Banks in Portugal did not have the same financial capacity as the richest countries in Europe. Loans with variable rates were initially a way for them to provide credit with competitive values ​​within this context”, says Nuno Rico, from Deco Proteste.

According to the economist, for many years banks had little interest in loans with variable rates. With few options available and less competition, the fees charged were not competitive. He assesses that, with the inflationary scenario, the situation has been changing, with more options for those who sign new contracts.