Mortgage Payments Have Doubled in Four Years and Two-Thirds of Portuguese Families Can No Longer Afford to Buy a Home
New Bank of Portugal data reveals that median mortgage payments rose from 350 to 855 euros between 2019 and 2023, with Lisbon now requiring 102 percent of median household income just to service a home loan.
The Bank of Portugal's quarterly Economic Bulletin, published on Wednesday, contains a finding that will not surprise anyone who has tried to buy property in the country recently but is no less striking for being expected: the monthly mortgage payment required to purchase a median-priced home has more than doubled in just four years, and housing is now formally unaffordable for roughly two-thirds of Portuguese families.
The supervisor's study calculates a straightforward ratio: the monthly loan payment for a median-sized home at a median price, divided by median household income. Between 2009 and 2021, that indicator stayed below 30 percent — a level generally considered manageable. Then it climbed rapidly. By the final quarter of 2023, it had reached 53 percent. It has since eased to 48 percent, but anything above 40 percent qualifies as what the Bank of Portugal calls an "overburden" for a median-income family.
The raw numbers tell the story plainly. In early 2019, the median monthly mortgage payment stood at 350 euros, based on a typical loan of around 96,800 euros. By the end of 2023, that same median payment had risen to 855 euros, reflecting a loan of approximately 146,400 euros. The driver was not primarily interest rates, which rose and then fell again, but the relentless increase in house prices themselves — the national housing price index surged roughly 140 percent between 2016 and 2025.
Lisbon and Porto: The Numbers Are Remarkable
The national figures already paint a difficult picture, but the situation in Portugal's two largest cities borders on the extraordinary.
In Lisbon, the median monthly mortgage payment rose from 907 euros in 2019 to 1,811 euros in 2023. That represents a theoretical effort rate of 102 percent of median household income. In other words, a family earning the median income in Lisbon would need to spend more than their entire salary to service a mortgage on a median-priced home of median size. Only households in the top 10 percent of the income distribution could buy a median property while keeping payments below 40 percent of income.
Porto's trajectory was even steeper in proportional terms. Monthly payments nearly tripled, rising from 550 euros to 1,339 euros — equivalent to 84 percent of median household income. Only those in the top 20 percent of earners could manage the standard affordability threshold.
In parts of the Algarve, the Bank of Portugal notes that "almost the entirety of resident family units would not be eligible" for a mortgage to purchase a median home.
A Problem That Has Spread Across the Map
One of the most significant findings in the study is how quickly the crisis has spread geographically. In 2019, only 9 of Portugal's 294 municipalities had affordability ratios above the 40 percent overburden threshold. By 2023, that number had risen to 104 municipalities. Coastal areas are the worst affected, but the problem has pushed steadily inland.
This geographic spread matters because it undermines one of the common responses to urban unaffordability: the idea that people can simply move to cheaper areas. That option is narrowing rapidly.
What This Means for Foreign Buyers and Expats
For the expatriate community, particularly those arriving from higher-income countries, Portugal's headline property prices can still appear attractive compared to London, Amsterdam, or San Francisco. But the Bank of Portugal's data reveals why the market feels so different from the ground level.
Foreign buyers, who typically arrive with savings denominated in stronger currencies or proceeds from property sales in more expensive markets, are competing with a domestic population whose median incomes have not kept pace with price growth. The record 41.2 billion euros in housing transactions in 2025 occurred alongside a domestic affordability collapse.
This dynamic has political consequences. The government's recent housing tax package attempted to address demand pressures, but the Bank of Portugal's data suggests the structural gap between incomes and prices has grown too wide for tax incentives alone to bridge. Parliament has debated rent controls and supply-side reforms, but no consensus has emerged.
For expats already in Portugal who bought early, the value of their property has likely soared. For those arriving now, the calculation is different. Getting a mortgage as a non-resident involves additional hurdles, and the underlying affordability data suggests that Portuguese banks are lending into a market where the majority of domestic buyers are already stretched beyond what regulators consider sustainable.
The Rental Alternative Is No Escape
The Bank of Portugal acknowledges that families priced out of buying may turn to renting, but Portugal's rental market in 2026 offers limited relief. Supply remains constrained, and rents in Lisbon and Porto, while off their October 2025 peaks, still consume a large share of median incomes.
The supervisor's conclusion is sober: the market is "marked by a prevalence of prices that are too high for the incomes of local families, implying that purchasing is only accessible to families with accumulated savings or non-residents from the municipality with higher incomes."
That sentence, buried in a technical bulletin, is perhaps the clearest official acknowledgment yet that Portugal's housing market has split into two: one for those with existing wealth or foreign incomes, and another — increasingly theoretical — for everyone else.
