Public Guarantee Scheme Accounts for 25% of All Portuguese Mortgages in August
The Bank of Portugal has released new statistical data revealing the significant market penetration of the government’s public guarantee scheme for youth housing loans. According to the report published on Monday, contracts utilizing this state guarantee accounted for 25.4% of all new mortgage agreements in Portugal during the month of August, demonstrating the measure's substantial role in the current real estate market. The program is specifically designed to assist first-time homebuyers up to the age of 35.
The source of this data is the Bank of Portugal (BdP), which regularly compiles and publishes statistics on the national banking and credit sectors. The methodology for this analysis involved tracking all new housing loan contracts and identifying those that included the state’s personal guarantee as defined under Decree-Law No. 44/2024. The data provides a clear quantitative measure of the program's impact since it became fully operational in January 2025.
In numerical terms, a total of 2,084 loans backed by the public guarantee were issued in August, amounting to a total value of €416 million. These figures, while slightly lower than the peak recorded in July, confirm a consistent and high level of uptake. Since the beginning of the year, the program has facilitated 15,300 mortgage contracts, with a cumulative value of €3 billion. As of the end of August, €407 million of the state's total allocated guarantee fund had been utilized, representing 37.5% of the available capital.
The geographic breakdown of the data shows a varied adoption rate across the country. The regions of Alentejo and Lezíria do Tejo have shown the highest relative uptake, where state-guaranteed loans constituted more than half of all mortgages granted to young buyers. Conversely, in the Greater Lisbon metropolitan area and the Autonomous Region of Madeira, the program's weight was less pronounced, accounting for approximately one-third of youth mortgage contracts. This disparity is likely influenced by regional differences in property prices, as the guarantee is capped at a transaction value of €450,000.
A month-over-month comparison indicates a slight moderation in August compared to July, with the number of state-guaranteed contracts decreasing by 14.7% and the total amount lent falling by 12.9%. However, the year-over-year trend shows a dramatic increase in home purchasing by young people, a phenomenon attributed not only to the guarantee scheme but also to concurrent tax exemptions on IMT and stamp duty for this demographic.
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The market segment analysis shows the program is most impactful among young, first-time buyers who lack the necessary savings for a down payment. By providing a state guarantee, the government enables banks to offer 100% financing, circumventing the standard prudential rules that limit loan-to-value ratios to 85-90%. This directly addresses a key barrier to entry for many young professionals and families.
Industry expert commentary suggests the program has been a primary driver of demand in the housing market throughout 2025. Economists note that while the scheme successfully improves access to credit, it also contributes to demand-side pressure on housing prices, particularly in a market with constrained supply. The government has responded to the high demand by recently increasing the total guarantee fund from €1.2 billion to €1.55 billion, following requests for increased allocations from several financial institutions, including BPI and various agricultural credit banks (Caixa de Crédito Agrícola Mútuo).
The government and the Bank of Portugal will continue to monitor the program's performance and its broader effects on the housing market. The current data confirms that the public guarantee has become a cornerstone of mortgage lending for young people in Portugal, fundamentally altering the financing landscape for a significant portion of first-time buyers.
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