Portugal data point of the day

Chatting to a director of a major Portuguese bank. I mention that his local branch manager told me that he\’s looking for 65-70% deposits on mortgages.

Director says that that\’s a little low really, 70%.

Note that this isn\’t the amount that they\’ll finance. This is the deposit they require.

Eeek.

7 thoughts on “Portugal data point of the day”

  1. How does that figure compare to the pre-crash era? Bearing in mind that the UK housing market is quite different to most other European countries’. For example I’m fairly sure I read several years ago that in Italy it’s quite usual for people to live with their parents until they can afford to buy a home outright, so virtually no mortgage market to speak of.

    Tim adds: That all rather changed in the past 20 years. 10, 15% down, five years ago was not unreasonable.

  2. Blue Eyes, IIRC pre-cash banks would lend up to 80% of the valuation (not the sale price). Also mortgages are all repayment not interest-only.

    Housing market in Portugal was relatively sane compared to Ireland and Spain….. emphasis on “relatively”.

    There was a spike in property prices at the time of Euro entry ……..peeps had to spend all those escudos/pesetas hidden under their mattresses quickly before they were no longer legal tender, I guess. I also recall a lot of Spanish folks buying property in Portugal at the time.

  3. Does the deposit requirement indicate that they believe there’s a high chance of a price crash, or is there really so little mortgage finance to go around that the banks get to pick the very best risks?

  4. The ex put down 10% with caixa Geral, kept it for four years, emigrated and lost 10% of the value. Doh!!! Probably still cheaper than to rent

    There’s some funny old law in Lisboa which is like if you made a contract with a landlord years ago he can’t raise the rent, or not much. So you get alot of potentially nice flats with really old folks that are completely dilapidated. The land lords wait for them to die, do em up and sell them to young professionals. You’ll get a block of flats where half are really funkily modernised 19th century architecture interior next to a flat that on the inside looks like it hasn’t been changed since the 60s.

  5. In Western Australia during the housing boom banks were lending 110% of the house value, with the only deposit being the government “first home buyers” grant. It worked about how you’d expect. It was a great time to be a bricklayer, that’s for sure.

  6. How much of a problem a deposit of that size is depends on the relationship of house prices to incomes. If the multiple is low, even a deposit of that size could be saved up. I don’t know what the situation is in Portugal.

    In London, such a deposit would pretty much ensure that only City traders and Greek shipping magnates could afford to buy houses, because there is already a vast discrepancy between house prices and average incomes. This might be a good thing, because it would of course force down house prices to something more realistic. But I can just hear the screams from the well-heeled grey vote, who were banking on their unearned profit from house price inflation to pay for their round-the-world trips after retirement and eventually their luxury care homes.

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