State Guarantee Backs 25% of All Portuguese Mortgages in 2025, Bank of Portugal Reports
A report released by the Bank of Portugal has revealed the significant impact of the public guarantee scheme for first-time homebuyers, which has supported nearly a quarter of the total value of all housing loans granted in the nation through August 2025. The mechanism, designed to facilitate property acquisition for young adults, has become a cornerstone of the current housing credit market.
According to the central bank's data, between January and August 2025, a total of 15,300 mortgage contracts were finalized under the state guarantee regime, amounting to a combined value of €3 billion. This indicates that the program was utilized in 21.7% of all housing loan contracts and accounted for 24.8% of the total mortgage funds disbursed by banks nationwide during the first eight months of the year.
The program is specifically targeted at young people up to the age of 35. Within this demographic, the guarantee's influence is even more pronounced. The data shows that these contracts represented 39.6% of all mortgages taken by young buyers and 41.9% of the total amount they borrowed. This translates to approximately four out of every ten young individuals who purchased a home this year doing so with the assistance of the state guarantee.
The Bank of Portugal's communiqué noted a slight moderation in August, with 2,100 state-guaranteed contracts signed for a total of €416 million. These figures mark a 14.7% decrease in the number of contracts and a 12.9% fall in the total amount compared to July. Nevertheless, even with this slowdown, guaranteed loans constituted 45.5% of contracts and 47% of the mortgage volume for the under-35 age group in August.
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The regional breakdown of the data indicates that the guarantee's adoption is not uniform across the country. The scheme has had its most substantial impact in regions with more accessible property prices. In the Alentejo and Lezíria do Tejo regions, for instance, more than half of all housing loans contracted by young buyers between January and August were backed by the state guarantee. In contrast, the program's penetration was lower in higher-priced markets. In Greater Lisbon and the Autonomous Region of Madeira, properties acquired with the state guarantee represented approximately one-third of the total for young buyers.
The public guarantee scheme was established under Decree-Law No. 44/2024. It functions as a state-provided surety to financial institutions, covering up to 15% of the property transaction value. This enables banks to finance up to 100% of the purchase price, provided the property value does not exceed €450,000. Eligibility is restricted to individuals aged 18 to 35 with annual incomes within the eighth IRS bracket (approximately €81,000), who are not existing property owners and are purchasing their first primary residence. The guarantee remains in effect for a maximum of ten years from the contract date.
The total state funds allocated to the program currently stand at €1.55 billion, following a recent reinforcement of €350 million. As of the end of August, €407 million, or 37.5% of the previously allocated amount, had been utilized.
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