Portugal's Non-Financial Sector Debt Reaches €847 Billion, Driven by Housing Credit
The Bank of Portugal announced on Friday that the total indebtedness of the non-financial sector, which encompasses public administrations, companies, and individuals, increased by 32.3 billion euros during the first half of 2025, bringing the total to 847 billion euros. The data indicates a significant rise in private sector borrowing, particularly in credit extended for housing. By the end of June, private sector debt stood at approximately 468.8 billion euros. This figure represents an increase of 13.2 billion euros in the first six months of the year. A detailed breakdown shows that the debt of private individuals grew by seven billion euros. The central bank specified that this growth was primarily fueled by borrowing from the financial sector, with 6.6 billion euros of the increase originating from this source. Of that amount, 5.1 billion euros was directly attributable to new housing loans. This surge in mortgage borrowing points to continued momentum in the nation's property market. The annual rate of change for household debt has now increased for the 19th consecutive month. In June 2025, it registered a value of 6.7%, which the Bank of Portugal confirmed is the highest level recorded since the statistical series was initiated in December 2008. This sustained increase underscores a strong appetite for real estate financing among the population. In parallel, the debt of private companies also rose by 6.2 billion euros, reflecting increased borrowing from the financial sector, foreign entities, and other non-financial companies. The public sector's debt also saw a substantial increase, rising by 19.1 billion euros during the same six-month period. This was largely due to investment in Portuguese public debt securities by non-residents. The overall indebtedness of the non-financial sector relative to the economy's output also grew. The debt-to-GDP ratio increased from 285.7% to 289.6% by the end of June. The Bank of Portugal explained that this change was a result of debt accumulation outpacing the growth of the Gross Domestic Product. The ratio for the private sector specifically rose from 159.8% to 160.3% of GDP, while the public sector's ratio increased from 125.9% to 129.3%. These figures provide a macroeconomic context for the housing market, showing that while demand for property remains robust, it is increasingly financed by debt. Stay informed on Lisbon property market developments at realestate-lisbon.com.
