State-Backed Youth Mortgages Total €2.5 Billion in Seven Months, Reports Bank of Portugal
The Bank of Portugal has released official data confirming that the public guarantee scheme for housing loans has supported 13,200 contracts for young homebuyers through July 2025. In a statement published on its website, the central bank detailed that these agreements amounted to a total of €2.5 billion in financing for the acquisition of permanent private residences. This government initiative is specifically targeted at individuals up to 35 years of age.
The report highlights the significant role the program plays in the youth segment of the housing market. The 13,200 state-backed contracts represent 38.7% of the total number of housing loans and 41% of the total monetary value of mortgages contracted by the under-35 demographic during the first seven months of the year. The policy's impact extends across the entire residential real estate market, with these guaranteed loans accounting for 21.2% of the total number of contracts and 24.2% of the total credit granted by the financial system for permanent home purchases nationwide.
Analysis of the monthly data shows a consistent and growing uptake of the program. For the month of July 2025, the Bank of Portugal recorded 2,400 new housing credit contracts under the state guarantee, with a combined value of €475 million. These figures constituted 45.6% of the contracts and 46.8% of the total loan amount for homebuyers aged 35 and under during that month. This represents a month-over-month increase of 6.1% in the number of contracts and a 6.5% rise in the total amount financed compared to June 2025.
The mechanism of the guarantee involves the Portuguese State covering a portion of the potential default risk for the lending bank, thereby reducing the entry barriers for young buyers who may have difficulty securing the full required down payment. According to the Bank of Portugal's statement, at the close of the last reporting month, 32.1% of the total capital allocated by the government for this guarantee facility had been drawn upon, equivalent to €348 million.
This policy was introduced by the government as a measure to address the housing affordability crisis, particularly for younger generations seeking to enter the property market. By facilitating access to credit, the government aims to stimulate homeownership and provide stability for young families and professionals. The data from the Bank of Portugal provides the first comprehensive overview of the program's performance since its implementation.
Officials from the Ministry of Housing have previously stated that the objective of the program is to ensure that young people are not excluded from the property market due to the high upfront capital requirements typically demanded by banks. The figures suggest that the policy is having a measurable effect, enabling a substantial volume of transactions that might not have otherwise occurred. The financial sector has reportedly integrated the guarantee system into its mortgage application processes, with all major banks participating in the scheme.
The continued growth of the program will be closely monitored by economists and market analysts, as it represents a significant state intervention in the housing market. The long-term effects on property prices and market dynamics will depend on the program's continued implementation and the broader economic context. For now, the data confirms it as a key factor driving activity in the first-time buyer segment of the Portuguese real estate sector.
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