Portugal's Housing Credit Growth Hits 8.1% in July, the Highest Since 2008
The Bank of Portugal announced today that the total stock of housing loans granted to individuals reached €106.3 billion in July 2025, reflecting an annual growth rate of 8.1%. This figure represents the most significant acceleration in the housing credit market since August 2008, signaling sustained and robust momentum in the nation's real estate sector. The data, part of the central bank's monthly report on bank loans and deposits, underscores a period of intense activity in property financing, with the total loan portfolio for individuals growing by 8.0% year-on-year, also a 17-year high.
The statistical release from the monetary authority detailed that the housing loan stock increased by €986 million in a single month, from June to July. This sharp rise is consistent with a trend of acceleration observed over recent months. According to the Bank of Portugal's analysis, this growth is a primary driver of the overall expansion in credit to the private sector. The report's methodology involves compiling data from the national banking system, providing a comprehensive overview of lending dynamics across various economic sectors.
Numerically, the data paints a picture of a market in full expansion. Beyond the headline 8.1% growth in housing loans, consumer credit also showed strong, albeit slightly slower, growth of 7.7%. Within this category, personal loans grew at a steady 7.2%, while car loans accelerated to 9.9%. The total loan amount for consumer and other purposes stood at €32.8 billion. These figures indicate broad-based consumer confidence that extends beyond the property market but finds its most potent expression there.
The expansion is not limited to a single region but reflects a nationwide trend, with significant implications for major urban centers like Lisbon and Porto, where property demand remains highest. The central bank's report provides a granular breakdown, noting that while credit to individuals is accelerating, lending to non-financial corporations (companies) experienced a slight slowdown, with a year-on-year growth of 3.5%, down from 3.6% in June. This divergence highlights the unique strength of the residential property market in the current economic climate.
Comparing these figures to previous periods provides critical context. The 8.1% growth rate starkly contrasts with the more subdued figures of the past decade, bringing the market back to a level of activity last seen before the global financial crisis. This suggests that the market has not only recovered but has entered a new phase of expansion. Economists will be watching closely to see if this rate of growth is sustainable in the coming months, particularly in the context of broader European economic trends and monetary policy.
An analysis of business lending reveals a more varied landscape. While the overall growth for corporate loans was 3.5%, the construction and real estate activities sector stood out with an accelerated growth rate of 7.6%, up from 7.1% in June. This indicates that developers are actively securing financing for new projects, a sign that the supply side of the market is responding to the intense demand from buyers. In contrast, sectors like transport and storage saw a contraction in credit, demonstrating a rebalancing of economic activity.
Industry experts have begun to weigh in on the implications of these statistics. Speaking on the condition of anonymity, a chief economist at a major Portuguese bank noted, “The data confirms the exceptional resilience and attractiveness of the Portuguese property market. The acceleration in housing credit, even as business lending moderates, points to households prioritizing real estate investment. This is driven by a combination of factors, including lifestyle changes, foreign investment, and a perception of property as a stable asset.”
The government and regulatory bodies have yet to issue a formal response to the latest figures. However, the Bank of Portugal is expected to continue its close monitoring of the housing market to ensure financial stability. The rapid growth in lending could lead to a review of macroprudential policies, although no such measures have been announced at this time. The balance between fostering a dynamic market and preventing overheating remains a key challenge for policymakers.
Historically, periods of such rapid credit expansion in Portugal have often preceded significant market shifts. The last time growth was this high, in 2008, the global economic landscape was on the verge of a major transformation. While the current context is different, the historical precedent serves as a reminder of the cyclical nature of real estate markets. The current boom is built on different foundations, including a more diversified international buyer base and stricter lending criteria than in the pre-2008 era.
The Bank of Portugal will continue to release these statistical updates on a monthly basis, with the next report for August's data anticipated at the end of September. These future releases will be crucial for determining whether the remarkable growth seen in July is a peak or part of an ongoing trend. Market participants will be looking for signs of either continued acceleration or a potential cooling-off period.
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