Early repayments of loans intended for the purchase of owner-occupied and permanent homes totaled 6.37 billion euros in the first nine months of the year, a value that increased by 64% – or four billion, in absolute terms – to 2.29 billion euros exceeded that recorded in the first nine months of the year. the same period last year, Banco de Portugal (BdP) informed Dinheiro Vivo.
Of that amount, which does not take into account the entire portfolio of mortgage loans in Portugal because, for example, it excludes financing for the purchase of a second home, EUR 2.6 billion relates to repayments (in whole or in part) made between January and were carried out in March. the quarter in which a greater volume of debt write-offs to the bank took place.
Natália Nunes, coordinator of the Deco financial protection office, explains that repaying the mortgage loan before the end date of the contract is a solution that makes it possible to reduce the installment payable to the bank from the start. By doing this, consumers discount not only the value of the outstanding capital, but also the interest associated with the loan. However, he warns: “If the only existing savings comes from the emergency fund, it is not advisable to use it for this purpose.”
To give you an idea of the impact: a customer who signed a credit agreement in November 2008 worth 150 thousand euros, indexed to the 12-month Euribor, with a term of 30 years and a spread of 1%, is currently paying a monthly amount of 690.98 euros. If this consumer decides to pay 20,000 euros in advance, his benefit from next month will be 531.15 euros, which amounts to a discount of 159.83 euros (-23%).
The simulation carried out by the Portuguese Consumer Protection Association also shows that this process is reflected in other items, namely in the Total Amount Attributable to the Consumer (MTIC), the calculation of which is made on the basis of the total amount of credit, adding all its costs, including interest, commissions, taxes and other bank charges.
If previously the interest on that loan was 37,912.63 euros, after the repayment of 20 thousand euros the customer will have to pay 29,143.11 euros, that is 8769.52 euros less. The total credit costs decrease from 124,377.17 euros to 95,607.65 euros, a decrease of 28,769.52 euros. “In addition, by reducing the outstanding capital, the value of the life insurance associated with the credit will also decrease. That is why the insurance premium can also be reduced,” the manager emphasizes.
Since, according to data from the regulator, 90% of mortgage loans have at least one variable component, that is, indexed to the Euribor, several families saw their budgets suffocated as a result of the interest rate increase implemented by the European Central Bank. (ECB) since July last year. According to Deco, more than 20,000 families have already sought its services for guidance and assistance in finding solutions to mitigate the effects of the increase in the cost of living, especially in the field of mortgage loans.
While some “want to know more about the support and measures created to minimize the impact of the rising cost of living, and how they can access them,” others anticipate “difficulties in fulfilling their responsibilities and they want advice on what they can do. to avoid non-compliance.” There are also people who seek help “to renegotiate their responsibilities, especially in credit,” explains Natália Nunes.
And among the incentives available is Decree Law No. 80-A/2022, in force since the end of November last year, which allows you to prepay mortgage loans with debt equal to or less than 300.00. thousand euros, without taxes or commissions, by exempting the 0.5% commission and stamp duty, which are usually charged in this process.
A change in the repayment regime for savings plans, extended until 2024, also made it possible to withdraw from the Retirement Savings Plan (PPR) without penalty, up to a limit of twelve times the value of the Social Support Index (IAS), i.e. 5762 .76 euros to pay off the housing loan.
Both measures are intended for loans with a variable interest rate, taken out for the purchase or construction of permanent homes.
Consumed by suffocating interest rates and emboldened by measures designed to soften their effects, families began to see their savings as a way to ease their housing costs. This, together with investments in savings accounts, has led to a decline in private deposits by more than EUR 7.78 billion since January 2023, reaching a total of EUR 174.6 billion at the end of the first nine months, an amount also lower than in the first nine months of this year. same period last year.
Presenting the latest quarterly results, the five largest banks operating in the country (BPI, Caixa Geral de Depósitos, Millennium Bcp, Novo Banco and Santander) continued to see an increase in the number of early repayments and the use of deposits to do so report.
*Dinheiro Vivo journalist
Source: DN
