Portuguese Household Debt Reaches Record High Driven by Mortgages
The Bank of Portugal released new statistics on Monday showing that the debt of Portuguese households reached a new all-time high in July, with housing credit being the primary driver of the increase. The data indicates continued strong activity in the national real estate market.
The central bank's report detailed that the total debt of individuals saw an annual growth rate of 7.19% in July. This corresponds to an increase of 1.1 billion euros in contracted loans during the month. The source of this data is the Bank of Portugal's official statistical database, which has tracked these figures since December 2008.
In specific numerical findings, the total debt of the non-financial sector (comprising households, non-financial corporations, and the public sector) grew by 1.2 billion euros in July, reaching a total of 848.2 billion euros. Of this, 469.1 billion euros corresponds to the private sector and 379.1 billion euros to the public sector.
The geographic breakdown was not specified, as this is a national-level statistic. However, the trend is particularly relevant for major urban centers like Lisbon and Porto, where the bulk of real estate transactions and mortgage lending occurs. In a year-over-year comparison, the 7.19% growth in household debt marks a significant acceleration.
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The market segment analysis shows a divergence between households and corporations. While household debt surged, the debt of private companies decreased by 900 million euros in the same period. This was mainly attributed to the amortization of 700 million euros in long-term debt securities held by non-resident investors. As a result, the overall private sector debt saw a modest net increase of 200 million euros.
Economists commenting on the data noted that while the demand for housing credit is a sign of a dynamic market, the rising levels of household indebtedness could pose a risk in the medium term, especially in a fluctuating interest rate environment. The government has recently reinforced programs to support young homebuyers, which may contribute to this trend in the coming months.
The Bank of Portugal did not provide specific commentary on the trend but continues to monitor lending standards and household debt levels as part of its financial stability mandate. The next comprehensive report on financial stability is expected to provide further analysis on this development. Stay informed on Lisbon property market developments at realestate-lisbon.com.