Portugal's Non-Financial Sector Debt Reaches €847 Billion, Driven by Housing Loans
The Bank of Portugal announced on Friday that the debt of the country's non-financial sector, which includes public administrations, companies, and individuals, increased by €32.3 billion during the first half of 2025, bringing the total to €847 billion.
According to the central bank's report, as of the end of June, private sector debt stood at approximately €468.8 billion, while public sector debt was nearly €378.2 billion. A significant portion of the private sector's debt increase was attributed to a surge in housing loans, signaling continued activity in the real estate market.
The detailed breakdown shows that private sector debt grew by €13.2 billion in the first six months of the year. Household debt was a major contributor, rising by €7 billion. This increase was primarily fueled by borrowing from the financial sector, which amounted to €6.6 billion. Of that figure, €5.1 billion was specifically for housing credit, underscoring the role of the property market in the broader economy.
The annual growth rate of household debt has now increased for the 19th consecutive month. It reached 6.7% in June 2025, which the Bank of Portugal noted is the highest value since the statistical series was initiated in December 2008. This historic high reflects strong demand for property financing among Portuguese families.
In parallel, the debt of private companies also rose by €6.2 billion, reflecting increased borrowing from the financial sector (€5.0 billion), the foreign sector (€0.7 billion), and other non-financial companies (€0.6 billion).
The public sector's debt increased by €19.1 billion, largely due to net investment from non-residents in Portuguese public debt securities, which totaled €14.8 billion. This indicates strong foreign investor confidence in Portugal's sovereign debt.
The report also highlighted the country's overall debt-to-GDP ratio. The total indebtedness of the non-financial sector grew from 285.7% to 289.6% of the Gross Domestic Product (GDP). The Bank of Portugal explained that this was a result of debt accumulation outpacing the growth of the GDP during the period.
The increase was seen in both the public sector debt-to-GDP ratio, which rose from 125.9% to 129.3%, and the private sector ratio, which edged up from 159.8% to 160.3%.
Looking at monthly figures, the debt of private companies in June 2025 was up 2.6% compared to the same month in 2024, accelerating from the 1.8% year-over-year increase seen in May.
These statistics provide a comprehensive overview of Portugal's economic landscape, with the housing market remaining a key area of credit growth and investment for the nation's households.
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