Portugal Injects Additional €350 Million into Youth Housing Guarantee Amid High Demand
The Portuguese government has officially reinforced the public guarantee scheme aimed at helping young people purchase their first home, increasing the total available funds by €350 million. A dispatch from the Minister of Finance, Joaquim Miranda Sarmento, published in the Diário da República this Wednesday, confirmed the increase, elevating the total program capital from €1.2 billion to €1.55 billion. This decision comes as a direct response to higher-than-anticipated demand and formal requests from participating banks that were close to exhausting their initial allocations.
The program, designed for individuals aged up to 35, has proven to be a critical tool in enabling access to the property market by allowing banks to finance 100% of a home's purchase price, thus removing the significant hurdle of a down payment. The Ministry of Finance stated that the approval of the reinforcement was a “necessary condition to, in a timely manner, allow participating institutions that exhausted their initially allocated guarantee limit to continue the measure.” The objective is to facilitate the uninterrupted concession of credit for permanent own housing to young people.
The additional capital injection follows specific requests from banking institutions. Banco BPI, part of the Spanish Caixabank group, requested and was allocated an additional €100 million, bringing its total available guarantee to €249.5 million. This places BPI closer to the initial allocations of major players like Banco Santander (€259.2 million) and the state-owned Caixa Geral de Depósitos (€257.2 million). The Caixa de Crédito Agrícola Mútuo de Mafra also saw its limit increased by €1.8 million. The remaining funds will be used to “secure future reinforcement requests that may be presented by the institutions adhering to the protocol.”
The policy's success is reflected in recent statistics from the Bank of Portugal. In the first seven months of the year, 13,200 mortgage contracts were signed under the state guarantee, totaling €2.5 billion in credit. This represents 41% of the total credit granted to homebuyers under 35 in that period. By the end of July, €348 million, or 32.1% of the initial €1.08 billion made available, had already been allocated, signaling the rapid uptake of the program.
An interesting trend noted in the official data is the measure's relative popularity in less densely populated regions outside of the major urban centers of Lisbon and Porto. The lower property values in these areas, combined with the state guarantee, appear to be driving a geographic dispersion of young homebuyers. This is significant given that the high property prices in the coastal metropolitan areas and the Algarve remain a major barrier to entry for many.
The eligibility criteria for the state guarantee remain unchanged. Applicants must be between 18 and 35 years old, have an annual income within the eighth IRS tax bracket (up to €83,696), and be purchasing a first-time permanent residence with a transaction value not exceeding €450,000. The measure is also complemented by a separate government initiative providing an exemption on the property transfer tax (IMT) and stamp duty for the same demographic, further reducing the upfront costs of acquisition.
Understand policy impacts on your Portugal property plans at
realestate-lisbon.com.
