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The goal is that banks do not take excessive risks in new loans and that customers pay their debts.
The new rules were announced on February 1, with the supervisor and
These limitations occur when the Bank of Portugal admitted in early June in the financial stability report that in the first half of the year, that there are "some signs" of overvalued, albeit limited, property prices.
For the moment, these rules are only one recommendation – although banks that do not respect them must explain – but in May the Governor of the Bank of Portugal, Carlos Costa, warned in parliament that if the banks did not respect them, they could pbad recommendations to binding orders.
The new rules establish three types of limits. That's what's changing:
Limits of Effort
Banco de Portugal recommends granting new loans only to clients who spend a maximum of half (50%) of their income net on the monthly payments of all loans
The bank supervisor makes exceptions, allowing them to exceed this limit of effort rate up to 5% of the total amount of loans granted by each bank each year and this fifth of the total amount of credits Banks can also take into account factors such as rising interest rates (by three percentage points) the rise in Euribor will compromise the ability to pay the credits and the decrease in monthly income for clients who are over age 70 at the end of the contract.
(19659010) The Bank of Portugal recommends that the ratio between the loan amount and the value of the collateral is limited to 90% for loans for own housing and permanent housing. In other words, the money borrowed for the purchase of a house can represent at most 90% of the value of the property given as collateral.
This ratio is calculated on the basis of the lower value between the purchase price of the house and the
Finally, in the case of credits for the acquisition of real estate held by banks themselves and for real estate leasing contracts can be lent the full amount (100%) of the property under guarantee
Limits on the maturity of loans
Banco de Portugal recommends a maximum of 40 years as a limit on the term of the loan for new credit agreements
It also calls for a gradual convergence with an average maturity of 30 years until the end of 2022.
New consumer loans are expected to last not more than 10 years old [19659022]
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