Banco de Portugal's Décade-Long Audit Squeezes Crédito-Habitação Spreads to 0.89 Points in 2024 — A Third of the 2.68 Points Banks Charged in 2014 With 90% of New Contracts Below 1%

The Banco de Portugal's ten-year audit of crédito à habitação pricing — published in the supervisor's Friday 28 May 2026 Relatório de Acompanhamento dos Mercados de Crédito — places the average mortgage spread at 0.89 percentage points on the 2024 reading, down from 2.68 points at the 2014 baseline. The compression is the sharpest on any pricing component in a decade of Portuguese consumer banking, with nearly 90% of all new variable-rate housing contracts written at sub-1% spreads.

The Decade in One Number

The 2.68-point spread of 2014 was the peak of the post-bailout repricing cycle, when Portuguese banks rebuilt margins on the back of a collapsing Euribor and an ECB rate cycle near zero. The descent was steady: the average spread fell below 2 points in 2016, below 1.5 points in 2019 and below 1 point in 2023. The 2024 reading of 0.89 points closes the cycle one-third of where it opened. The BdP attributes the move to three structural drivers: competition (the five Tier-1 banks rotating between price-leader positions), liquidity (Portuguese deposit overhang as the Euribor cycle reversed) and public-policy measures including the BdP's Aviso 4/2017 on responsible lending and the 2023-2025 fiscal toolkit for first-time buyers and IRS-Jovem-eligible borrowers.

The Distribution — How Banks Are Pricing in 2024-2025

The audit's distributional read is more striking than the headline. Roughly 14.7% of variable-rate contracts in 2024 priced at spreads of 0.5 percentage points or below — up from 5% in 2023 — and 68.5% sat between 0.5 and 1 point. The under-1% cohort therefore accounts for 83.2% of all 2024 variable-rate originations, against a 2023 reference around 60%. The remaining 17% sit between 1 and 2 points and are typically loans with lower bank-cross-sell penetration (no domiciled salary, no protection products, no investment-fund packaging). The 2024 reading also confirmed that more than 80% of new contracts were written with mixed-rate structures — a regime that fixes the rate for an initial period before reverting to variable — reflecting borrower-side hedging against the 2022-2023 Euribor shock.

The Enforcement Angle

The BdP's audit ties into the supervisor's parallel macroprudential file — the Banco de Portugal's 27 May financial-stability report argued for binding rather than recommendatory powers on debt-to-income ratios — and the audit's mention of compliance gaps on bank-side cross-sell disclosure suggests an enforcement extension under the existing transparency rules. The BdP did not name banks in the published audit, but flagged that intervention notices and corrective orders are being prepared.

What This Means for Expats — The Bottom Line

• If you signed a Portuguese mortgage before 2020, you are likely above the current market. Spread renegotiation is a viable conversation with your bank — Tier-1 lenders are now defending their book against competitor poaching at 0.5-0.8 point spreads, and the BdP's audit gives borrowers an explicit reference number to anchor the discussion.
• The sub-0.5%-spread segment now covers nearly one in six new mortgages. These are typically deals with full salary domiciliation, life-insurance cross-sale, and a deposit-balance commitment. The cross-sell is the bank's margin recovery — borrowers should price the bundled package against the headline spread on a total-cost-of-ownership basis.
• The mixed-rate dominance changes the renegotiation conversation. 80% of 2024 contracts being mixed means the renegotiation window most borrowers will face is at the variable-reversion date — typically 5, 7 or 10 years out — rather than at origination. The market spread at reversion will be the operative number, not the spread set at signing.
• The macroprudential file is now political. Banco de Portugal Governor Mário Centeno has explicitly asked the government to convert the DSTI recommendation into a binding instrument — a path that, if adopted, would compress mortgage demand at the lower-income end and could push spreads modestly higher at the margin from a borrower-mix effect.

The full audit and the BdP's accompanying Relatório de Acompanhamento are public on the supervisor's site; the 2025 update with the post-Euribor-reversal cycle is due in late July 2026.