Banks Say the Bank of Portugal's New Repayment Cap Helped Make Mortgages Slightly Harder to Get This Summer, but Expect No Further Tightening Before the New Year

Banks in Portugal made it slightly harder to get a mortgage between July and September, and this time they named the Banco de Portugal (Bank of Portugal) and its tighter borrowing rules as one of the reasons, which they had not done in July. That is the main finding of the central bank's Inquérito aos Bancos sobre o Mercado de Crédito (Bank Lending Survey) for October 2026, which was published on Tuesday.

The survey asks the banks that answer it how their lending policy and the demand they see changed in the last quarter, and what they expect next. This round went to banks on 21 September and the answers came in by 6 October. It compares the third quarter of 2026 with the second, and the expectations refer to October to December.

What changed for home buyers

The banks reported that their credit standards for home loans became "slightly more restrictive" in the third quarter. Standards for consumer credit and other personal loans tightened too, to a lesser degree. Lending standards for companies did not change.

Among the reasons for the tighter mortgage standards, the banks listed the changes to the Bank of Portugal's macroprudential recommendation, which "contributed slightly". The other factors pointing the same way were the state of the housing market and its outlook (including where prices are expected to go), the creditworthiness of borrowers, and the banks' own tolerance of risk.

The revised recommendation took effect on 1 August. It cut the maximum share of a household's net income that can go on loan repayments, the taxa de esforço (debt-service-to-income ratio), from 50 to 45 percent, and reduced the room banks have to lend above that limit. The third quarter is the first period the survey covers in which the new rules applied.

On the terms of the loans themselves, the picture is mixed. Overall, the banks said terms and conditions on home loans became slightly less restrictive, through the maturity (how long a loan can run). At the same time, they said the macroprudential changes had pushed slightly toward stricter terms. The share of home loan applications rejected did not change.

A second quarter of slight tightening

The July survey had already reported slightly stricter mortgage standards in the second quarter. Then, the banks put it down to the general economic outlook and the outlook for the housing market, and they did not mention the central bank's rules. In that round they also reported a slight rise in rejected mortgage applications and slightly lower demand for home loans, and they expected standards to tighten a little more over the summer. They did.

Demand held steady

Household demand for loans did not change overall in the third quarter, the banks said. The general level of interest rates weighed slightly on demand for home loans, but not enough to move the total. The rate on the average mortgage has risen for four months in a row, while bank valuations of homes were up 14.2 percent in a year in September.

What banks expect this quarter

For October to December, the banks expect no change in their lending standards for households. They do expect household demand for loans to fall slightly, for both home loans and consumer credit.

For companies, the banks expect slightly stricter standards on loans to small and medium-sized enterprises and on long-term loans. Demand from large companies fell in the third quarter, which the banks linked to lower investment needs.

The banks also expect it to become harder to raise money of their own over the next three months through medium and long-term debt and through securitising (packaging and selling on) loans to companies and mortgage loans. This round included a one-off question on crypto assets and stablecoins: Portuguese banks reported no effect on their finances, their strategy or their lending standards, and expect none in the next 12 months.

The survey reports the direction of change, not how many people were approved or refused. For a buyer, its practical message is that the stricter tests that started in August are now showing up in how banks describe their own lending. The banks do not expect them to tighten further before the end of the year.