State-Backed Youth Mortgage Guarantees Reach €2.5 Billion in Portugal
The Portuguese government's policy to provide a public guarantee for housing loans for young people has resulted in 13,200 contracts valued at €2.5 billion in the first seven months of 2025. The data, released by the Bank of Portugal (BdP), highlights the significant role the state is playing in facilitating access to homeownership for citizens up to 35 years of age.
The policy's objective is to lower the barrier to entry for first-time homebuyers by having the state guarantee a portion of the loan, thereby reducing the risk for financial institutions. According to the central bank's report, these contracts represent a substantial portion of the youth housing market, accounting for 38.7% of the total number of contracts and 41% of the total mortgage amount for this demographic. This initiative is part of a broader government strategy to address housing affordability and stimulate the property market.
The implementation of the guarantee scheme has shown a marked impact on the national housing credit landscape. Across all age groups, these state-backed loans constituted 21.2% of the number of contracts and 24.2% of the total amount of credit granted for the purchase of a primary and permanent residence through July. This indicates a significant government footprint in the mortgage sector, aiming to provide stability and encourage property acquisition.
The month of July demonstrated continued momentum for the program, with 2,400 new contracts signed, totaling €475 million. This represented a 6.1% increase in the number of contracts and a 6.5% rise in the total amount contracted compared to June. These figures point to a growing reliance on the program as it becomes more established among prospective buyers and lenders.
A key figure from the Bank of Portugal's statement is the utilization rate of the allocated funds. As of the end of July, €348 million of the state's guarantee fund had been used, which corresponds to 32.1% of the total capital set aside for the program. This indicates that there is still significant capacity within the existing budget to support further housing loans under this scheme throughout the remainder of the year.
The Ministry of Housing and Urbanism has previously stated that the program is designed to be a temporary support measure, with its effectiveness and future to be evaluated based on market conditions and housing accessibility metrics. Financial sector representatives have noted the program's positive effect on lending volumes but have also pointed to the need to monitor its long-term impact on property prices and market dynamics.
This government intervention comes at a time of fluctuating interest rates and concerns over property valuations in key metropolitan areas like Lisbon and Porto. The policy aims to ensure that the housing market remains accessible, particularly for younger generations facing economic pressures. The ongoing monitoring by the Bank of Portugal will be crucial in assessing the program's success and guiding future housing policy decisions.
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