Portuguese Mortgage Market Enters New Phase of Digital Transformation
The process of obtaining a housing loan in Portugal is undergoing a significant evolution, marked by increased digitalization, flexibility, and a greater role for credit intermediaries. The shift promises a faster and simpler experience for homebuyers compared to the historically complex and paper-intensive procedures. In the near future, the market is expected to advance further with the adoption of new technologies and more flexible product offerings from financial institutions.
According to industry leaders, the traditional mortgage application process, often described as a “labyrinthine journey” involving long waits and uncertain outcomes, is being replaced by modern, technology-driven solutions. Today, prospective buyers can access real-time simulations and immediately compare proposals from different banks. Technologies such as artificial intelligence are now used for automated document collection and validation, significantly reducing processing times.
João Matos, a director at the consulting firm EY, highlighted the potential of emerging technologies. He noted that some banks are already using distributed ledger technology, like blockchain, to reduce loan analysis times from days to hours. Matos also pointed to the promise of smart contracts, which could one day automate contractual clauses and property transfers, further streamlining transactions.
The transformation extends beyond technology to the roles of various institutions. Ricardo Sousa, CEO of Century 21, remarked that progress requires action from the state to consolidate information, from the regulator to reduce friction, and from the banks to innovate. Sousa argued that banks will need to develop more flexible products, such as loans with a mix of fixed and variable rates or options for interest-only payment periods. He also predicted an increased reliance on credit intermediaries (IdC).
This trend is already well-established. Francisca Guedes Oliveira, an administrator at the Bank of Portugal (BdP), confirmed that credit intermediaries now represent more than 50% of the distribution channel for new housing credit. These firms provide a centralized platform for consumers to access and compare the offerings, procedures, and requirements of multiple banks.
With the growing influence of these intermediaries, regulatory oversight is also increasing. Guedes Oliveira announced that the Bank of Portugal is preparing a legislative proposal to amend the legal framework for IdCs. The changes will aim to “increase transparency for the client.” As an example, she mentioned the possibility of requiring intermediaries to present a minimum number of loan proposals to a client or ensuring that their commissions are not linked to the loan's annual percentage rate (TAEG).
Luís Pereira Coutinho, an administrator at Caixa Geral de Depósitos (CGD), added that technology alone is not a panacea. He stressed that “if the processes are not good, technology does not solve” the underlying issues, indicating a need for holistic reform.
The total amount of outstanding housing loans in Portugal reached €106.3 billion in July, an 8.1% increase compared to the same month in the previous year. According to Ricardo Guimarães, director of Confidencial Imobiliário, this growth is largely due to an increase in the number of transactions driven by lower interest rates and competition among banks on spreads, rather than higher levels of household debt per transaction. He noted that the share of credit in the value of home purchases has remained stable at around 50% since 2017, down from nearly 80% in 2009.
Bank prudence, aligned with the macroprudential measures of the Bank of Portugal, continues to shape the lending environment. Ricardo Sousa concluded that with interest rates descending slowly and a limited margin for significant price corrections due to supply shortages and high construction costs, the market is evolving cautiously.
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