The Bank of Portugal has replaced its 2018 macroprudential recommendation for new housing and consumer credit, tightening borrower affordability requirements in response to faster household lending, rising loan sizes and house prices, and higher borrower indebtedness. The debt service-to-income ratio limit will fall from 50% to 45%, including an interest rate shock and an income reduction in the calculation. Institutions may exceed the limit for up to 10% of credit granted in each half-year. Housing loan maturity rules will be simplified to a maximum of 40 years for borrowers aged 35 or younger and 35 years for those over 35, replacing the recommendation on average maturity. The specific 100% loan-to-value limit for purchases of institution-owned real estate will be removed, making those transactions subject to the general loan-to-value limits. Immovable property financial leasing will also leave the recommendation’s scope, while movable property financial leasing will remain covered. The revised requirements apply where the borrower’s creditworthiness assessment takes place from Aug. 1, 2026.
2026-07-02Bank of Portugal
Bank of Portugal tightens consumer credit recommendation, lowers debt service-to-income limit to 45%
The Bank of Portugal has tightened its macroprudential recommendation for new housing and consumer credit, reducing the debt service-to-income limit from 50% to 45% and simplifying housing loan maturity caps. The revised framework also changes loan-to-value treatment for institution-owned property and excludes immovable property financial leasing. It applies to creditworthiness assessments from Aug. 1, 2026.