Young people between the ages of 18 and 34 have returned in force to the housing market and now represent around 60% of the total amount of new loans for the purchase of their own and permanent home, compared to less than 40% last year, according to the most recent Credit Market Survey, published this Tuesday by the Bank of Portugal (BdP).
The report indicates that global demand for housing credit remained stable between July and September, compared to the previous quarter, but that the share of young people increased significantly. The return of this age group is, therefore, reinforcing the dynamics of credit, in a context in which the banking offer remained stable and the granting criteria practically unchanged.
Even so, despite the credit policy not having undergone significant changes, there was a slight reduction in spreads (banks’ profit margin on loans), result of growing competition. Application rejection rates remained stable, suggesting that the banking system remains prudent but not tightening conditions.
For the last quarter of the year, the banking sector does not foresee major changes in housing credit, although it expects slightly stronger demand, driven by younger families.
Demand from companies grows slightly
In corporate credit, the third quarter also saw a slight increase in demand, with emphasis on small and medium-sized companies (SMEs), which continue to finance investment and treasury needs. Large companies, in turn, resorted less to bank credit and more to bond markets, a trend that the BdP considers to be increasingly consistent.
The survey states that banks kept financing rules practically unchanged, albeit with occasional adjustments, with SMEs in more vulnerable sectors facing a slight increase in requirements. A slight easing of conditions is anticipated for the end of the year, especially for short-term loans.