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Households’ indebtedness: a microeconomic analysis based on the results of the households’ financial
The analysis of the Portuguese households’ indebtedness based on microeconomic information is particularly useful at the present time, given the high level of debt of this sector and the increase in credit default. Using this type of data it is possible to identify structural relationships between the households’ characteristics and their indebtedness and, in particular, to detect the situations of greater vulnerability, which should be taken into account in the analysis and monitoring of the adjustment process that is underway in the Portuguese economy. This paper uses data from a new survey, the Household Finance and Consumption Survey (HFCS), which took place during the second quarter of 2010. According to the results obtained, low income and young households who have taken mortgages are the most vulnerable groups of the population, for which the probability of materialisation of credit risk is higher. However, the fact that low income households have relatively low participation in the debt market mitigates the impact of their eventual entry into default on the financial situation of banks. As for young households, although their market share and the value of their loans are high, their debts are often guaranteed by real estate and the value of the debt service to income ratio for the majority of these households is lower than the usual threshold, used to identify situations of greater vulnerability.