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Posted by portugalpress on February 01, 2018

With Portuguese families reported to be owing the country’s banks over €25 billion, bank regulators have decided to ‘move the goalposts’.

From now on, it will be harder to get credit which last year was flying out of the nation’s banks at a rate of €350 million per month.

Dinheiro Vivo has described 2017’s lending rates as the highest in the last seven years.

The 12 month period saw banks that financial experts have been sounding warnings over lend over €13 billion - and that has “worried” the Bank of Portugal, reported RTP early this morning.

Thus the ‘new measures’ - which though not mandatory, will “require” banks not adopting them to explain their reasoning.

The changes include restricting long-term loans to 30 years (the current limit is 40) and mortgage lending to only 90% of the property value.

For other loans, bank regulators do not want the country’s banks giving credits for more than 80%.

There are some expedient exceptions to the rules, however. In the case of borrowers seeking to buy properties owned by the banks, BdP concedes credit can be 100%.

With the rules on mortgage lending due to come into effect on July 1, the central bank is calling for one further safeguard: it doesn’t want families’ borrowing costs to exceed more than half their monthly income, with social security payments and taxes payable factored in.

To anyone with the minimum of understanding of accounting, these measures make perfect sense. But according to headlines today, they are being interpreted as “moves to block families from credit” (Economia online) and a situation where the Bank of Portugal wants the country’s lenders to become “more demanding”.