The total amount of loans granted by banks to households for the purchase of homes – largely indexed to Euribor (90%) – decreased during the first quarter of 2023: from 100.3 billion euros at the end of December 2022 to the consolidated portfolio amounted to 97.9 billion by 2.4 billion euros at the end of March. The reason for the delay? The increase in prepayments since the beginning of the year, the Bank of Portugal (BdP) pointed out in its most recent Financial Stability Report (REF), without specifying absolute values.
However, in response to DN/Dinheiro Vivo, the regulator revealed these figures, highlighting a new trend: during the first three months of the year, depreciation by Portuguese households increased by 70% compared to the values of a year ago. 2.6 billion euros in home loans were paid in advance, which amounts to 2.6% of the stock. In March 2022, the advance on the house debt amounted to 1.5 billion euros.
“This is a development that is considered normal in a context of sharp rises in the cost of borrowing and is reinforced by the significant difference with deposit fees, which have increased more gradually,” the regulator justifies.
The Associação Portuguesa de Bancos (APB) also reiterates the “rationality” of such behavior, explaining that “it is logical that, given the current context of rising interest rates and the incentives granted for the early repayment of mortgage loans, families are looking to the options most favorable to your interests and capabilities”.
The institution led by Vítor Bento guarantees that the increases in benefits do not constitute “special care”.
One of the “incentives” is Legislative Decree No. 80-A/2022, which entered into force at the end of November and allows families to pay off the mortgage loan in advance, without paying taxes or commissions. The new law provides for an exemption from the 0.5% commission and stamp duty usually charged by banks when paying off loans early for the acquisition or construction of permanent homes.
The measure, which is part of the Meer Wonen package presented by the government, is intended for contracts with variable rates and does not set any limits on the amount owed.
Withdraw deposits to write off
The BdP governor also acknowledged during the presentation of the REF that the new rules had “a significant impact on the banking system”. The fact is that banks such as Caixa Geral de Depósitos (CGD), Santander, BPI and Millennium bcp have admitted an increase in write-offs since the beginning of the year, even justifying some customer deposit outflows for this purpose.
Paulo Macedo was the only one of the leaders to come forward with figures showing that fees at CGD have totaled 600 million since March 2022.
At the same time, statistics released by the regulator in the first quarter show that financial institutions in Portugal lost 7.6 billion euros in deposits from individuals. In January there were minus 2.5 billion, in February more than 2.1 billion and in March 3 billion. At the end of this period, household deposits totaled €174.8 billion, down 0.3% year-on-year.
The APB recalls that “the reduction in the stock of private deposits that has taken place is also part of households’ options to diversify the use of their savings.” The association representing the banking sector refers to the increased demand for savings bonds, whose net subscriptions amounted to nine billion euros in the first three months of the year, according to DN/Dinheiro Vivo accounts, based on data from the BoP.
Mário Centeno assured that the financial indicators “do not reveal any problems in view of the recent evolution of the allocation of household savings”, namely in government debt securities, such as the APB, which guarantees that “the amounts realized do not affect the liquidity levels of the banks, which remain very robust”. “We believe that this is even part of a healthy competition offered to those who save,” the governor stressed.
Proposal on the way
At the beginning of March, the government submitted a proposal to parliament as part of the More Housing package that aims to include the capital gains resulting from the sale of real estate realized in 2022 in the exceptional IRS exemption regime. The new law exempts families from tax if they use the amount in question to repay loans they took out to buy a permanent home.
The measure was already included in the first version of the proposal that was placed in public consultation, but only applied to transactions executed in 2023 and 2024.
Mariana Coelho Dias is a journalist for Dinheiro Vivo
Source: DN
