If you are thinking of borrowing money from a bank to buy a home, it is worth reading on, as there are new rules to consider when taking out a mortgage.
These guidelines have applied since 1 August 2026 and stem from a macroprudential recommendation by the Bank of Portugal (BdP). This week’s Deco Alerta column explains the details.
This Deco Alerta column is produced by Deco, the Portuguese Consumer Protection Association*, for idealista/news and is aimed at all consumers in Portugal. The original Portuguese-language article is available here on idealista.pt/news.
I heard there are new mortgage recommendations and rules. Can you confirm this and explain what has changed?
We can confirm that there have been new BdP rules for granting mortgages since 1 August. The changes are intended to strengthen responsible lending and reduce the risk of households becoming over-indebted.
The aim is, of course, to promote the stability of the financial system, though the rules also help ensure that consumers take out loans that match their financial circumstances.
The BdP identified certain risks relating to the value of approved loans, the pace of mortgage lending and the risk profile of some consumers. It has therefore adjusted the rules to prevent difficulties further down the line.
It is important, however, not to confuse responsible lending with the issue of access to housing. The difficulties many households face when buying a home stem mainly from the sharp rise in house prices, which has far outpaced growth in incomes. As a result, even consumers who can afford a monthly repayment may struggle to buy a property.
Measures designed to promote responsible lending should therefore be accompanied by policies that increase the housing supply and improve affordability, particularly for young people and those looking to buy their first home.
What is actually changing?
The changes focus on four main areas:
The recommended debt-service-to-income ratio falls to 45% – Until now, the BdP recommended that this figure should not exceed 50%.
Since 1 August, the recommendation has been 45%, allowing households to retain a greater financial buffer for other household expenses and unexpected costs.
- New maximum loan terms – There are now only two limits on the length of mortgage agreements: up to 40 years for borrowers aged 35 or under, and up to 35 years for borrowers over 35.
An end to 100% financing for bank-owned properties – Properties owned by the lending institutions themselves can no longer receive financing of up to 100% of their value.
The general limits on the ratio between the loan amount and the property value, known as loan-to-value, now apply to these properties too.
- Property leasing agreements are no longer covered – Financial leasing agreements for property, or property leasing, are no longer included in this recommendation.
What do these changes mean for people looking to buy a home?
For some households, the changes may mean a lower maximum amount available to borrow from the bank.
Take a household with a net monthly income of €2,800.
- Under the previous rules, it could manage loan repayments of up to around €1,400 per month.
- Under the new recommendation of a 45% debt-service-to-income ratio, this falls to approximately €1,260.
The difference may appear small, but it could mean a lower loan amount. In turn, buyers may need to look for a less expensive home or have a larger deposit available.
If you are considering a mortgage, these points remain useful regardless of the new rules:
- Draw up an up-to-date household budget.
- Calculate your debt-service-to-income ratio, taking all existing borrowing into account.
- Consider not only how much the bank will lend, but also how much you can repay without putting your household’s financial stability at risk.
- Make sure there is still enough financial breathing room to cover unexpected expenses.
- Compare proposals from different financial institutions.
- Look beyond the monthly repayment and assess the nominal annual interest rate (TAN), annual percentage rate of charge (TAEG), total amount payable by the consumer (MTIC), insurance and the contract’s other costs.
- Run through different scenarios for changes in interest rates, particularly if choosing a variable or mixed-rate mortgage.
An informed decision remains the best way to protect the household budget.
Contact us for more information.
*Contact us by phone at 21 371 02 00, by email at deco@deco.pt or via WhatsApp: +351 966 449 110. Follow us on Facebook, Bluesky, Instagram, YouTube and LinkedIn. Visit our website: deco.pt.
