Banco de Portugal Says the Public Mortgage Guarantee for Under-35s Is Already Covering 62% of the State's Allocated Envelope by March — Almost Half of New Youth Mortgages Now Use the Mechanism

The youth mortgage public-guarantee scheme that the Government deployed in 2024 to crack the deposit-and-LTV barrier facing first-time buyers under 35 is now doing measurable work in the credit data. Fresh figures published by the Banco de Portugal show that, by the end of March 2026, banks had used roughly 62% of the total envelope the State allocated to the mechanism — and almost half of all mortgages signed by under-35 buyers in the country were now structured with the guarantee.

How the Mechanism Works

The garantia pública is a partial state-fiador instrument: it backstops the slice of the loan that would otherwise breach the regulator's loan-to-value cap, allowing banks to extend credit up to 100% of the property's appraised value to qualifying under-35 borrowers. The combination — a state guarantee on the high-LTV slice plus the bank's underwriting on the rest — lets first-time buyers complete a purchase without the conventional 10–20% down-payment that a normal Portuguese mortgage requires. From a household-balance-sheet point of view, that is the difference between renting for another decade and buying.

The guarantee runs alongside the IRS Jovem tax break and the IMT-young stamp-duty relief — three different lever pulls aimed at the same demographic. The IMF Article IV mission this week pushed the Government to wind down the IRS Jovem, citing €693 million of foregone 2026 revenue. The garantia pública sits in a different category: it is a contingent state liability, not a tax expenditure, and it is currently in force through 2026.

Who Is Drawing on It

The borrower profile that BdP describes is consistent with the policy intent. The typical user is a Portuguese national, aged 26 to 30, with higher-education qualifications, taking a long-tenor loan often above €200,000. That ticket size is itself a marker of how far Portuguese house prices have moved — €200,000 was a respectable urban two-bedroom in 2018; it is now the lower bound for a comparable property in most metro markets. The state guarantee, in other words, is not just unblocking starter studios; it is funding the median entry-level family purchase.

The geographic distribution is the most interesting line in the BdP read. In the interior of the country, more than half of all youth mortgages now use the public guarantee. In Greater Lisbon, the share is materially lower. The pattern reflects two separate things at once: prices in the metropolitan core have run far enough away from under-35 incomes that even a 100% LTV is not enough, while in the interior the binding constraint really is the deposit, and the guarantee resolves it.

The Wider Mortgage Market

The youth-guarantee numbers land into a broader mortgage market that is itself running at full pace. BdP's March release showed banks extending €4.057 billion in new credit to households in the month — the first print above €4 billion in the series since January 2003. New housing credit alone reached €2.238 billion in March, a fresh series high in that subseries, with €536 million added on the month. Mortgage rates eased to 2.81%, and term-deposit rates posted their largest single-month jump in two-and-a-half years.

What this means for an expat or returning-Portuguese reader thinking about a 2026 purchase: the youth-guarantee channel is the cheapest live mortgage product in the country if you qualify, and the data say it is already absorbing material flow. With the IRS Jovem facing IMF and Brussels pressure, the guarantee is currently the most durable of the three under-35 housing-policy levers. Its 2026 expiry — and what, if anything, replaces it — will be the line to watch in the State Budget cycle this autumn.