As the macroprudential authority, the Banco de Portugal implemented in July 2018 a Recommendation governing new credit for house purchase and consumer credit. By encouraging the adoption of prudent credit standards, the Recommendation aims to increase the resilience of households and the financial sector to adverse shocks, mitigating borrowers’ arrears in the future.

The report concludes that compliance with the measure was broadly based. In 2022 credit institutions continued to observe the guidelines on the loan-to-value (LTV) ratio, the debt service-to-income (DSTI) ratio, the maximum maturity for credit for house purchase and consumer credit, as well as regular interest and principal payments. 

The average maturity of new credit for house purchase stood at 30.7 years in December 2022, which is a three-year reduction from January 2021 when the series peaked. Convergence of the average maturity towards 30 years was almost fully complied with by the end of 2022. A convergence plan has been set out for institutions not yet aligned with the established limit.

In 2022 the risk profile of borrowers of new credit for house purchase continued to improve, with a decline in the share of credit granted to high-risk borrowers.