Pre-Approved Mortgages Become Key Strategy in Portugal's Housing Market
A new report based on data from financial intermediaries highlights a growing trend in the Portuguese mortgage market: prospective buyers are increasingly seeking pre-approved financing before identifying a specific property to purchase. This strategic approach now constitutes a majority of home loan applications, with data from idealista/créditohabitação showing that 67% of requests since the start of the year were made without a property attached. This represents a significant shift in buyer behavior, driven by a competitive real estate environment.
This trend is most prominent in the country's main urban districts, including Lisbon, Porto, Setúbal, Faro, and Braga. The district of Lisbon leads this movement, with 72% of all mortgage applications this year being for pre-approval. The primary motivation for this strategy is to gain a competitive advantage. In a market where demand often outstrips supply, having financing pre-approved allows buyers to make swift, confident offers, which can be a deciding factor for sellers.
Tiago Vilaça, the president of the National Association of Authorized Credit Intermediaries (ANICA), confirmed this development in a statement. "Many consumers opt to request a pre-approval of the credit from the bank as a way to better prepare for the home acquisition process," he said. This preparation involves understanding their exact borrowing capacity, which allows them to tailor their property search to a realistic budget. This avoids situations where buyers find a desired home only to discover later that they cannot secure the necessary financing.
Miguel Cabrita, the head of idealista/créditohabitação in Portugal, also commented on the trend, emphasizing the need for speed in the current market. "Closing deals requires celerity and having the credit process already treated presents itself as a plus in the process," he explained. He advises that searching for a property while simultaneously arranging the mortgage brings only advantages, as it clarifies the criteria of different banks and minimizes the risk of losing a property to another, better-prepared buyer.
The pre-approval process provides buyers with a certificate or statement from a lender that specifies the amount they are eligible to borrow. While this is not a final, binding loan agreement—as the final terms depend on the specific property being purchased and a valuation—it serves as a powerful tool. It signals to real estate agents and sellers that the buyer is serious and financially vetted. This strategy is becoming an essential part of the due diligence process for anyone looking to purchase property in Portugal's active market. Explore investment strategies and opportunities at realestate-lisbon.com.
